Employers urged to sort out compulsory pension schemes ahead of capacity crunch
Employers are being urged to sort out their auto enrolment pension scheme before the financial sector faces a capacity crunch.
Swindon accountants Banks BHG, which is running a series of free seminars on auto enrolment, says there is a risk that some insurers providing the schemes will reach capacity and firms could be turned away. Similarly, a poll conducted among independent financial advisers found half were concerned about dealing with a sudden rush of SMEs needing professional support.
Auto enrolment requires employers to register qualifying employees in a pension scheme. There are different staging dates depending on the size of the business, and from this year a huge wave of smaller firms will be pulled in, with a spike at the end of 2016 and into 2017.
By the time the spike hits, some insurers may have closed their books to new schemes, leaving employers with little choice other than to join the Government scheme, NEST – the National Employment Savings Trust.
Richard Mathews, director at Stratton-based Banks BHG, said firms were advised to sort out their auto enrolment scheme sooner rather than later.
“There’s no avoiding auto enrolment without facing penalties,” he said. “Depending on the size of the business, it’s either already arrived or is imminent. Even if an employer’s staging date isn’t until 2017, they really need to be planning now.”
As far back as the summer of 2013, the insurer Scottish Life was reported to be turning away AE business from firms which were less than six months from their staging date, unless they met certain criteria, because they were concerned about capacity. It’s also understood that Legal & General may not deal with employers who are within three months of their staging date.
Last year, research by Now: Pensions found 51 per cent of IFAs were concerned about their ability to service the increasing volume of SMEs approaching their staging date.
Companies which fail to meet their auto enrolment obligations face penalties from The Pensions Regulator, starting with a £400 fixed penalty notice and escalating penalties up to £10,000 per day. Already, fixed penalty notices have been issued for non-compliance.
Richard added: “We think the message is gradually getting through, as the auto enrolment seminars we’ve run so far have been fully booked. Our aim is to give employers as much information as possible about AE and to encourage them to then be proactive and sort out their scheme.”
Banks BHG’s auto enrolment seminars will be on Wednesday, February 4 and on May 13 at their offices, starting at 5.45 for 6pm and followed by a light buffet.
To book your place, please visit www.banksbhg.com or email Claire Hunt at firstname.lastname@example.org