Have you staged yet for auto enrolment?

Have you staged yet for auto enrolment?

Didn't find your answer?

If you’re an FD or CFO within a company that has already staged for auto enrolment, we’d love to find out how the experience was for you, good or bad.

What lessons would you pass on to other businesses nearing their staging date?

Tell us how difficult or easy the process was to manage.

Replies (14)

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By phibber
01st Aug 2014 18:00

Staged in April

The organsiation Ive just left staged in April 2014 using NEST as the provider. With around 270 employees by the time we staged, we had a lot of help from our outsourced payroll provider to automate the process of identifying the individuals who need to be enrolled/were entitled / were non eligible.

I found the most difficult part of the process to be the research needed before even thinking about how to identify a provider. The complexity of the legislation is almost absurd, and took plenty of study before I felt ready to even think about talking to colleagues or suppliers about it.

I did speak to a couple of pension providers and a IFA, none of whom showed any enthusiasm in helping us identify schemes, and the provider of our legacy pension refused to open a scheme compliant with automatic enrolment legislation.

As more organisations are brought into the system, I can anticipate an overwhelming pressure being brought onto the three providers specialising in autmoatic entrolemt: NEST, Peoples Pension and Now Pensions, and wonder if they will be able to cope with any vastly increased demand.

Having chosen NEST, and having run the scheme for four months, I think the ongoing bureaucracy of the letters we were required to send out alongside the necessity of uploading new enrolments, contributions and processing opt outs will be an ongoing problem. If I were to start again, I would be looking to see if Peoples Pension or Now Pension gave any additional help with this part of the process.

If I were to offer any adviceto those with staging date coming up I think I'd start with:

  Read as much guidance as you can to understand what you have to do, and how much this is going to cost, in terms of contributions, additional admin and upgrades to systems

  Check that your payroll systems / provider can cope with automatically identifying who needs to be enrolled, who is non-eligible and who is entitled. Doing this manually each month is not a viable option.

 Don't waste too much time thinking about IFA or shopping around for the best schemes - keep it simple and start by looking at the three schemes named above. You'll need your time and money to ensure compliance rather than anywhere else.

 

HTH, Paul

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Replying to lionofludesch:
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By Kazmc
11th Aug 2014 11:25

Now:Pensions

luaphluaph wrote:

Having chosen NEST, and having run the scheme for four months, I think the ongoing bureaucracy of the letters we were required to send out alongside the necessity of uploading new enrolments, contributions and processing opt outs will be an ongoing problem. If I were to start again, I would be looking to see if Peoples Pension or Now Pension gave any additional help with this part of the process.

I recently had a meeting with Now:Pensions who informed me that they do all comms on your behalf.

 

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By zebaa
01st Aug 2014 22:07

Oh come on.

The advice ' Don't waste too much time ... shopping around for the best schemes'. just leaves me gobsmacked. Getting it right in the first place with the correct pension can make a huge difference after 50 years. Very sad.

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Replying to Jennifer Adams:
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By GuestXXX
17th Mar 2015 17:15

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By zebaa
02nd Aug 2014 12:02

Maybe it is just me.

When my company pays pension contributions on behalf of an employee, my desire is that they get the maximum benefit that can reasonably be decided on at that time. It further occurs to me that management may also be employees and that to simply decide on a fund 'because its easy' is shooting themselves in to foot too.

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Replying to Wilson Philips:
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By GuestXXX
17th Mar 2015 17:15

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Replying to dfens:
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By tom123
03rd Aug 2014 08:05

I wonder if I have missed something?

secondhand_22 wrote:

zebaa wrote:

When my company pays pension contributions on behalf of an employee, my desire is that they get the maximum benefit that can reasonably be decided on at that time. It further occurs to me that management may also be employees and that to simply decide on a fund 'because its easy' is shooting themselves in to foot too.

 

I'm not saying you (or anyone else) doesn't want the fund to grow.  Obviously if you asked an employer whether he wants a fund that will grow or one that won't he will say "I want one that grows".  But desire doesn't always translate into results - regardless of good intentions.

However well intentioned you might be, how sure can you be that you're choosing a fund that will perform well?  You can't.  As I say, I posit that were I to select a random FC/FD and ask him for a fund recommendation, on average, I'd expect to be no better off than if I threw a dart at the funds page of the FT.  Some FCs will pick a fund that performs, other will pick one that goes down the pan.  Same as my dart will and probably with similar frequencies.

That was the point I was making in that part of my reply.

We are a smaller employer, with an existing pension scheme. Presumably there is nothing in auto enrolment that prevents employees selecting their own fund choices, as they do no, with the guidance of the IFA?

 

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Replying to Tax Dragon:
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By moneymanager
03rd Aug 2014 18:44

investment choice

As with so much of the auto-enrolment rules the answer is yes, and no.

Generally employees who are a member of a QWPS (Qualifying Workplace Pension Scheme) at Staging Date are owed no auto-enrolment obligations (they are already members) and no auto-renrolment duties should they temporarily cease membership. New joiners post Staging are owed those duties irrespective of the scheme the join.

 

As to fund choice in either an existing or new scheme you are correct.. except.

 

1) a pre-staging scheme does not require a default fund in respect of existing members but does in respect of post staging joiners (eligible and ineligible job holders but not entitled job holders if the same scheme is to be used for them).

 

2) all schemes do and will offer alternatives which an individual is free to select with or without advice (note, NO employer should give investment advice although generic info without any personal opinion is okay, but this is a potentially dangerous area for well meaning employers to stray into).

Actually employers have a big enough task choosing and even bespoking default funds for employees which doesn't even have to be the same for all. Fund management is an onerous task for large DB scheme trustees with professional support and possibly even personal expertise; for small employers this task is going too far.

The possibly good news is that I am convinced that there will be such a large element of compliance (even where unintentional eg Dunelm) that employers and employer groups should and will campaign for the vast simplification of the legislation. The TPR got the job (did the want it?) and have grafted the AE legislation on to pensions legislation with all its complexity. For instance the opt-out regs were introduced to avoid those for whom a pension really made no sense being able to make a complaint (to gov UK). Since then the rules now allow full commutation of a pension fund anyway leaving only a tiny minority for whom the immediate cashflow implications of even modest contributions is too much. A further small tweak allowing early fund withdrawal (as in teh US 401k plans) would get round that as well.

This fat lady has not sung yet.

 

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By moneymanager
02nd Aug 2014 19:13

Nail on the head

I think that @luaphluaph has it more or less right. The choice of the pension plan itself is largely secondary to the ongoing employee identification/enrolemnt/opt out procedure and that systems integration with the pension of choice.

However, and it's a big however too many employers will go for the 'easy option' and find themselves obliged to make up the contribution shortfall from the 'statutory minima' should an employee choose to reduce or halt their own contributions. I imagine that most employers will want to avoid having to pick up that tab but poor research at outset (i.e. the TPR's Essential Guide to Autoenrolllment which doesn;t even get you to first base) could easily leave you in that position. Correct scheme selection/design togehre with contract alterations can stop that happening.

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By zebaa
03rd Aug 2014 12:13

@tom123

In a DB scheme employee choice would be a non starter. It just does not work like that. In a DC scheme it might be possible in theory for a small number of employees, but the administration would be horrible for  anything else.

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By zebaa
03rd Aug 2014 12:29

@secondhand_22

I suspect it is yourself that is missing the point. Please allow me to explain further. You said of fund selection  '...I'd expect to be no better off than if I threw a dart at the funds page of the FT'.

So you state that a totally random selection will, on average, produce equal to results to a considered one. I could not disagree more.

Don't forget because of the long time scale of pensions and the compound effect, what starts out as a small difference adds up to a big difference in the end.

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Replying to Justin Bryant:
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By GuestXXX
17th Mar 2015 17:16

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By dnicholson
03rd Aug 2014 17:22

Bad legislation
@zebaa

But the largely pointless detailed rules and penalties around the way employees join a scheme pushes the employer towards penalty avoidance in the short term rather than pension results in the long term.

If the desire of the legislation is to maximise employee benefit they've gone the wrong way about it.

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By moneymanager
04th Aug 2014 07:23

investm

Apologies for typo, should have read

'such a large element of NON compliance'

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