From Adviser Guide: Auto-Enrolment
Q: What are the options for employers?
Employers have the option to postpone automatic enrolment for eligible employees by up to three months.
Employers will have no choice about providing a suitable workplace pension scheme for their employees and will also not be able to coerce employees to exercise their option to opt-out.
Employers will, however, have options as to what type of pension scheme - or schemes - they provide and which pension scheme eligible employees will be automatically enrolled into.
This could be an existing or new defined benefit or defined contribution scheme or a group personal pension, so long as it meets certain minimum requirements.
Alternatively, Steve Wood, a senior consultant for Helm Godfrey, said the new low-cost government scheme, known as the National Employment Savings Trust, could be used or one of the new multi-employer schemes being specifically created for automatic enrolment.
Employers also have the option to postpone automatic enrolment for eligible employees by up to three months, he added, and longer for qualifying DB schemes.
Employers can pay more than the minimum level of contributions if they wish.
Andrew Towner, director of employee benefits at Cartlidge Morland, said employers can use their existing scheme if it meets certain qualifying criteria, amend an existing scheme or set up a new arrangement that meets the same requirements.
He said: “They can use Nest which is obliged to accept any employer or a combination of Nest and qualifying schemes.”
Whether an employer plans to use an existing scheme or bring in a new one for some or all of their workers, Graham Vidler, director of communications and engagement at Nest, said they also need to think about how to implement the changes.
This includes everything from organising data and systems to telling workers what is happening.
For example, Mr Vidler said if employers are considering their options around using a new scheme, they might ask the following questions:
1) How will a new scheme work alongside any existing arrangement?
2) Is the scheme suitable for those workers who have not saved in a pension scheme before?
3) How does it invest their money?
4) Does it use clear language when communicating with you and your workers?
5) How would any new scheme deal with large numbers of joiners and leavers?
6) How easy is the new scheme to administer?
To help employers and their advisers with planning for 2012, Nest offers an Employers’ guide to automatic enrolment, which provides quick and easy-to-understand information on preparing for the new duties.