Parsonage’s view on Auto Enrolment 2017

With the enrolment for 2016 now largely complete we start to look forward to 2017, ‘The Big One’.

Why do we call it ‘The Big one’?

Well, according to The Pension Regulator, since auto enrolment began in 2012 to October 2016 293,868 companies completed the declaration of compliance to inform the regulator they have met their responsibilities. 

In 2017 511,000 small and micro are estimated to have to setup up pension for their staff!

This means next year 1,400 companies a day must take out a pension, which is 58 an hour every hour.

Needless to say, this kind of demand will put a huge amount of pressure on the pension industry no matter how much it tries to gear up for this demand. 

So, what should you do?

Top Tips:

1. Plan ahead, don’t leave it to the last minute. ‘Why not?’ I hear you ask. Well, if you miss your deadline you could initially find yourself with a £400 fixed penalty and if you still don’t get it sorted you face escalating penalties (£500 per day for companies employing between 5-49 staff). Why risk it

2. Work out what’s important to your business. There are loads of schemes out there, all of which will get you compliant, but they aren’t all the same! They will offer different investment choices, different extra perks, different levels of automation, different levels of support. A maybe most importantly they all have different costs for both the employer and the employee.

3. One of the biggest parts of auto enrolment is the administration and record keeping. Who is going to be responsible for this? You, someone else in the business, a payroll bureau, your accountant. If it is you or one of your employees you may want to source a pension that takes care of this for you.

4. What do you staff expect and/or value? There are different ways of calculating how much to contribute to the pension. Qualifying earnings is becoming the more normal and is also likely to be the lowest cost to the employer and employee. Are your staff likely to value a pension? If so, making a contribution above the minimum might be a great way to motivate your staff.

5. If in doubt ask for help. There are loads of great independent financial advisers out there who can help you make the right decisions. Also, The Pension Regulator has a great website packed with useful tips and support: http://www.thepensionsregulator.gov.uk