HR departments in the UK’s biggest businesses have spent significant time and resource ensuring they have complied with auto-enrolment in the past 18 months. Yet for many smaller companies the journey has not yet started. Often SMEs have little or no dedicated HR help, so for those with auto-enrolment looming, it is critical to get ahead in order to comply on time.
A very important date
The first thing that any business considering auto-enrolment should do is work out its staging date. Knowing when your company needs to meet its auto-enrolment responsibilities allows you to plan accordingly. However, it seems that many firms are falling at the first hurdle, with more than half of those due to stage in the next 12 months admitting that they are in the dark when it comes to determining when they need to be auto-enrolment ready.
With fines of up to £2,500 per day for businesses that don’t comply with the legislation, SMEs need to ensure they know when their staging date is – and that they don’t miss it. HR must make the business aware of its staging date in good time, and that it is correct based on the number of workers on its largest payroll in April 2012.
Time and resource
Our research found that complying with auto-enrolment legislation could take up to 103 days per firm as there are 33 different administrative tasks to conquer. That’s a lot more work than many employers realise.
In fact time and resource are two of the biggest barriers to complying with auto-enrolment for businesses so it’s vital to plan ahead. The Pensions Regulator advises businesses to prepare for auto-enrolment up to 18 months ahead of their staging date.
In reality that’s simply not possible for smaller businesses that are focused on running smoothly day-to-day. However, it’s crucial to leave enough time to handle the process and HR must understand how much of the task is coming its way. Some things take significantly more time than expected. Even ensuring you have up-to-date, correct data for all employees can be far more difficult and time-consuming than you may have initially thought.
At first, the idea of enroling all employees into a pension may sound relatively straightforward. But once you delve into it, the to-do list evolves quickly. One key area for the HR department is employee communications. These have to be made at the right time in the right way to keep within the law.
How will the scheme sit with existing benefits; what will happen with any existing workplace pensions? All these issues need to be addressed and HR needs to make sure it keeps an audit trail of who received what, and when.
We have found that once auto enrolment compliance starts many employees have questions to ask that no one in the company feels qualified to answer. Over 50% of the calls to our employee helpline are about opting out. Have you considered how you will deal with these enquiries? Now is the time to investigate, so you either have the resource and capability to respond or have outsourced the solution to someone who can support you.
As the clock ticks on it is clear that if you work for an SME in some capacity, you will have a crucial role to play in keeping the business on the auto-enrolment path. SMEs have size and flexibility on their side, but with over 500 pages of guidance to read through from The Pensions Regulator and without the resource and in-house knowledge of the big corporates, they will need some guidance and support to navigate the auto-enrolment maze.
David White is managing director of Creative Auto Enrolment