As smaller businesses prepare to put their plans for 2017 into practice, there’s one thing that should be on almost every small employer’s radar. I’d say auto enrolment is one of the most important things that employers right around the UK must deal with in 2017, it’s both a legal duty and an important staff benefit.
So what should be part of your auto enrolment thinking in the new year? We asked Paul Budgen of NEST, which has been set up by the government especially for auto enrolment, to share his insight and advice at this crucial time.
The Department for Work and Pension have provided some inspiring statistics. They’ve calculated that by 2020, 10 million people will be newly saving, or saving more into their pension, due to automatic enrolment. They also worked out that by 2020 auto enrolment will inspire savers to put away an extra £17 billion a year into a workplace pension.
In reaching this goal, forecasts from the Pensions Regulator suggest around 1 million smaller employers will reach their automatic enrolment deadline in the next 15 months. 2017 is set to be a busy year for those in the pensions industry, but we’ve been preparing for it so I’m confident we can meet these volumes.
Perhaps you’re one of those business owners who has already started putting your auto enrolment plans into action. Or you might be at the start of the journey.
Whatever your circumstance, I thought it would be helpful to share 3 key tips on what you might need to know about auto enrolment in 2017.
1. Are you using the latest technology to make auto enrolment easier?
In recent years many schemes, including ours, recognised that innovative technological solutions were vital to meet the volume of employers set introduce auto enrolment. As auto enrolment has progressed and moved from larger to smaller employers, technology has become more streamlined.
You can now use technology to complete routine processes and integrate pensions with your existing systems. One option is NEST web services, which integrates pensions with payroll. Once its set up, when you complete your payroll cycle you simply need a single click to submit your pensions data securely over the web to us.
This seamless integration is also important when thinking how to cut down on both the potential for error and the time it takes to process your pensions. When two systems can actually fit together naturally, as when you are processing payroll, you already have access to almost all the information needed for worker assessments and contributions.
There’s been a big push across the fintech sector towards the creation of seamless and secure bridges that link the two processes, so you don’t need to enter the same data multiple times. We’re anticipating more and more employers will make use of innovations like this to make auto enrolment an even more straightforward proposition through 2017 and beyond.
2. How does the default fund of the pension scheme you have in mind stack up?
With 9 out of 10 workers set to stay in their default pension fund when auto enrolled, choosing a pension scheme with a good default is vital. But making accurate comparisons can be hard, especially as there’s a number of reviews out there that essentially compare apples with oranges.
To help bring together sector knowledge and provide fairer, impartial comparisons, we commissioned financial research group Defaqto to develop more accurate measures of performance. Their report, How to analyse auto-enrolment default funds is the first of its kind, and will hopefully serve as a useful tool for anyone aiming to make useful comparisons of default funds in the years ahead.
3. A new year can bring new relationships – but is your potential pensions adviser linked into your potential scheme?
We found out that many smaller employers will be turning to a pension adviser to help meet their auto enrolment duties. Our research previously indicated almost three quarters of small and micro employers planned on using an intermediary to help with auto enrolment.
There are lots of routes to finding a qualified adviser but it’s good to check they’re familiar with the systems your business uses. Many intermediaries are now signed up to online hubs, like NEST Connect, that help them administer a large volume of clients. If you’re planning on using an adviser, why not check whether your adviser is already linked up with the scheme you plan to use?
These are just three quick tips for getting auto enrolment right in 2017, but I’m sure there’s going to be a lot more to discuss in 2017.
- 5 Problems small businesses are having with auto enrolment
- Auto-Enrolment – 5 Common small business questions, answered
- 5 things to consider when choosing a pension scheme for your business
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