By Daniel Hunter
With the one-year anniversary of automatic enrolment imminent, NEST has today (Friday) launched the top five “dos and don’ts” for employers, based on its insights into the challenges faced by employers who have implemented automatic enrolment so far.
"Automatic enrolment has brought a radical change to workplace pensions, but it will rapidly become the new normal," Tim Jones, CEO of NEST, said.
"Whilst the early stages have primarily affected large employers, the numbers of employers coming under the duties increase dramatically in the next few months. We all have to up the pace to be prepared for much higher volumes and to meet the challenges implementing automatic enrolment brings.
"NEST is already working with over 1,000 employers for automatic enrolment. Our insights into their experiences have enabled us to develop some really useful dos and don’ts for employers still to go through the automatic enrolment experience."
1. Plan early — don’t underestimate how long it will take, talk to your payroll and other providers as soon as possible.
2. Assess your workforce to understand which of your workers are affected.
3. Communicate with staff clearly and early; engage and involve. Have a communication plan and involve all relevant departments in your business.
4. Examine systems (particularly payroll) to ensure they are ready and capable.
5. You may want help - you may want guidance from experts/external advisors.
1. Plan: NEST experience indicates that just over half (53%) of employers have spent more than 10 months preparing for the reforms with almost a quarter (24%) taking more than 16 months. Conflictingly, research from NEST shows that there are a number of triggers that galvanise employers into starting their automatic enrolment planning, namely:
· When they are back from summer holidays
· It’s after their year-end (when they’re busy)
· They’ve completed another project (for example RTI)
· 1st January (start of calendar year)
"Employers aren’t always leaving themselves enough room to implement automatic enrolment and may be placing unnecessary pressure on their business to meet their duties in time. Employers can register with NEST to receive countdown emails; these email reminders can help employers stay ahead of the game," says Tim Jones.
Over the last year NEST has seen indications that employers are assuming their incumbent provider will be able to meet their automatic enrolment requirements; this is not always the case. By starting conversations early, employers can ascertain whether they can use their existing provider or whether they need to start looking elsewhere.
2. Assess: There are 3 types of workers, eligible, entitled and non-eligible. By carrying out a worker assessment you can identify which category each of your workers belong to and your responsibility to them. This will make your job much easier when you need to automatically enrol your workforce.
3. Communicate: Communicate with staff clearly and early, have a communication plan and involve all relevant departments in your business. By using effective communication at the start, you can save time-consuming questions later.
Charles Cotton, Rewards Adviser, the Chartered Institute of Personnel and Development (CIPD) comments: "Getting the communication right from the outset will help make the running of automatic enrolment much smoother. Our members have found that communications have greatly reduced the number of questions they receive from workers. What’s more, workers who hear about their new pension from their employer are much more likely to value this as part of their reward package."
4. Examine systems: Assess systems (particularly payroll) to ensure they are ready and capable for your automatic enrolment needs.
Karen Thomson, the Chartered Institute of Payroll Professionals (CIPP) comments: "Automatic enrolment has required investment in payroll processes and systems, whether in-house or outsourced. The payroll function is best placed to examine the age and earnings of a workforce and determine the number of workers to be automatically enrolled. In addition, payroll can establish the date that workers become 'eligible' for contributions, calculating those contributions and managing refunds to workers who've opted out."
5. You may want to get help: Get advice if you need it. You may want guidance from experts and external advisors. NEST has carried out extensive research with employers and advisers to understand what this new market wants from a pension scheme, and we’ve incorporated these features into the design of NEST. What they are looking for is something that takes away the headaches of running a scheme: a scheme that is easy to set up and administer day to day; has low charges; with a sophisticated and suitable investment approach; and clear and straightforward communications for members and employers.
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