Most IFAs who intend to advise on auto-enrolment are concerned about their ability to service a surge in business this year as tens of thousands of small to medium-sized businesses hit their ‘staging’ dates to implement a pension scheme.
According to research conducted by Defaqto on behalf of Now: Pensions, more than half of 264 advisers questioned who are either currently advising or intend to advise on auto-enrolment are concerned they will not be sufficiently resourced to meet the expected demand surge. As a result, one in five of these firms stated they are planning to take on new staff this year.
This could translate into substantial recruitment activity: 47 per cent of respondents said they are currently advising SMEs on auto enrolment while 32 per cent intend to or are considering doing so, meaning close to 80 per cent could be active in this space. Just 17 per cent definitively responded that they do not intend to advise.
In 2014, the number of companies reaching their staging date will increase eightfold with 30,000 companies alone staging over a four-month period in mid-2014.
In the first two months of 2014 some 4,000 medium-sized businesses will be auto-enrolled, leading to fears that a “capacity crunch” could prompt providers to close their AE doors.
Scottish Life has previously said it may be forced to close its doors to new AE business in 2015 due to capacity issues. Aviva was also said to have admitted it may have to leave the AE market post-2015 once the staging date arrives for smaller businesses owing to capacity limits.
Fiona Tait, business development manager at Royal London-owned Scottish Life, warned that some 12,000 firms will have staging dates by May 2014, and that this figure will rise to over 90,000 every month by the end of 2017.
Almost nine out of 10 (86 per cent) of IFAs anticipate that growing numbers of pension providers will not offer their auto enrolment schemes to SMEs leaving many with a last minute panic to find a provider.
Terry Barnes, director of Harrogate-based Budge and Company, said: “The volume of employees that will hit their staging date at the same time is huge and the reality is that there aren’t enough IFAs to assist them.
“This, combined with some employers leaving auto enrolment to the last minute and providers closing their doors to business, is cause for genuine worry.”
