Escalation on the cards for employee pensions

Pensions minister Steve Webb (pictured, right) and numerous industry experts and providers at the Ceridian customer conference in London this week warned small businesses to start preparing early for auto enrolment to avoid the impending “capacity crunch”.

After 35,000 large corporations led the way into auto enrolment during 2013, the minister told the conference that in terms of employee numbers, “It’s 3m down and 7m to go.”

But he and other experts at the conference emphasised...

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Comments

i never ceased to be amazed

justsotax | | Permalink

by the distance between what a government thinks and what is reality...lets see...so 8% contribution per year....now I wonder what that equates to in pension over say a 45 year period after taking account of inflation....my guess is (and it is only a guess) for the 'normal' person earning 15-30k not a lot....given the type of pension provider...or what is offered I suspect that the growth of such a pot will be minimal....

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ireallyshouldkn... | | Permalink

I think he meant 35,000 companies done (most of which would have a pension scheme anyway) and several million who haven't.

I am still waiting for the promised land:

 "Even smaller firms will have providers to choose from, but they’ll just get a package designed… to fulfil their legal duties"

Where are they then?

So far we have NEST and er that's it for the "under 5 employee" brigade which by volume is the largest part of the market and the one that wont move until beat with big sticks. 

 

John Stokdyk's picture

Crunch factors and budgeting

John Stokdyk | | Permalink

Ceridian’s Melanie Goddard led a workshop at the conference to help companies planning for staging dates during 2014 - which is likely to reach a figure of 35,000 during the year, with 12,000 slated for staging in July.

Goddard commented that the capacity crunch take effect with the pensions industry running at many times its normal capacity. “Some providers will only take you if you sign up six months head of your staging date and some are turning companies away.”

As pension providers get more picky, “Some companies may not get what they want as providers take a more prescriptive, cookie-cutter approach to auto enrolment. The days of flexible, bespoke solutions are pretty much behind us.”

After supporting 243 larger customers through auto enrolment during 2013, Ceridian has 591 who were due to stage this year. “There’s going to be a peak point where were dealing with three times the number of employers we have to support,” said Goddard.

Her message, like many at the conference, was “start preparing early” and consider all the various aspects of auto enrolment, from choosing a pensions provider, ensuring that systems for managing the auto enrolment opt ins and outs and contributions were in place as well as educating employees and keeping them informed about what was happening.

For finance, there is an additional concern according to Helen Close, an HR consultant who helped with the auto enrolment project at national plant hire group Hewden. She warned of the implications of the unexpectedly high levels of take (around 90% of all employees have stayed in schees that have launched so far).

When it came to budgeting our CEO and CFO suggested that 30% of employees would stay in. I did my own quick survey among staff and 87% said they planned to stay in, and 30% were interested in going for the highest level of contributrions. In the end we budgeted for 95% of employees at 4%.

Sticking to a budget for 30% when the take up levels are that high could cause some financial issues, she added: “Get your budgeting right and err on the side of caution.”

its

justsotax | | Permalink

 a shame a little more thought didn't go into this....I presume to auto opt in option was precisely there to create a large take up....really not rocket science!  and with pension providers being picky, with no doubt 'cheap' products being used for this scheme one wonders if there are any remote possibilities that a decent pension will be achieved by anyone but for those contributing significantly more than the standard, or those higher rate taxpayers....

Just the start

secondhand_22 | | Permalink

It's the usual government approach of introducing a concept gradually so as to avoid a backlash.

Once the system is in place, I expect the opt out option will be removed and the minimum contribution levels will go up.

Perhaps eventually the pension pots will be nationalised/aggregated....Who knows where we are headed but given the UK spends more than it earns (and will continue to do so unless massive massive cuts are made - which they won't be) stealth taxation can only be heading one way.