Firms running out of time to get workplace pension advice
Businesses are being warned they face a financial and HR ‘double whammy’ by leaving it too late to comply with changes to workplace pensions.
New auto enrolment rules, where companies have to automatically enroll their employees in a qualifying pension scheme, are currently being phased in by the government with the largest employers already having to comply.
The sliding scale of so-called ‘staging dates’ for auto-enrolment will see some firms with fewer than 250 employees having to comply from April 2014. Businesses have a choice of using their own choice of qualifying pension scheme, or a government administered scheme known as NEST.
The process will put huge administrative and financial burdens on companies, with many choosing to outsource its implementation to accounting and payroll providers to ensure they are compliant.
But Dave Gleeson, a Chartered Financial Planner at Moore and Smalley, and an expert on the new rules, believes many businesses are in danger of leaving it too late, which could not just cost them financially, but may also risk damaging relations with their employees.
He said: “Many companies still do not understand just how big a change these new rules are having on businesses. It is not simply a case of setting up a pension arrangement, but complying with some very detailed regulations – both initially and on an ongoing basis. Companies need to start planning at least six months, but ideally 12 months before their staging date.”
According to Dave, there are two major dangers as the staging dates for smaller companies get closer over the next 12 to 18 months. The first is that the sheer number of businesses needing advice is likely to result in a lack of professional advisers being available to help them as they will be too busy to assist the late comers. This may in turn lead to any increase in professional costs.
The second is that the choice of providers my become more limited as insurers become more selective in accepting new schemes with potentially only the government’s NEST scheme being duty-bound to accept any new business.
Dave added: “Businesses in this position should consider the design of their scheme and their choice of provider early to ensure their staff are getting an appropriate solution. Failure to do this could result in potential staff dissatisfaction.”
As part of a team helping businesses to prepare for auto enrolment, Dave says businesses need to be aware of their staging date and put steps in place to ensure they are compliant, including seeking professional advice as soon as possible.