Personal Pension  

AE opportunity emerging as smaller employers gear up

Advisers seeking to take advantage of the opportunity offered by auto-enrolment should seek to may hay while the summer sun is shining, as new data reveal smaller employers are taking steps now to comply with the rules despite many not being due to be staged for two years or more.

With larger employers already being staged in from October of last year, data from The Pensions Regulator show the proportion of medium employers that have drawn up plans has increased by 11 per cent to 84 per cent, compared to a survey conducted in autumn 2012.

According to the regulator, the first wave of medium sized employers - those with between 160 and 250 staff - are due to stage in April 2014. It said these employers should now be making sure they have compatible payroll software in place and be well on way to selecting “a qualifying scheme that suits their workforce”.

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In addition, the regulator’s research found that around 30 per cent of micro-employers, up 12 per cent on the autumn survey, are now looking at auto-enrolment preparations and 40 per cent of small employers have already started a plan.

Just over half of medium employers felt the process would take four months or longer than in autumn 2012. This could be a significant timescale: 41 per cent of small employers still plan to ‘leave it as late as possible’ according to the study, consistent with the findings of the previous survey.

Small employers, who are not due to stage until June 2015, remain positive about meeting their deadlines, with 57 per cent ‘very confident’ and 23 per cent ‘fairly confident’ they would meet their deadlines. Around 74 per cent of micro-employers were also confident they would be ready.

The Pensions Regulator’s survey also revealed that 80 per cent of medium employers believed auto-enrolment is a good idea for workers compared to 64 per cent in Spring 2012.

Recent data from the Department for Work and Pensions also revealed that average opt-out rates for those who have auto-enrolled are only 9 per cent.

Charles Counsell, The Pensions Regulator’s executive director of automatic enrolment said: “The response of the largest employers to automatic enrolment has been positive and at the start of August more than 1,600 employers had returned their compliance declaration to us by registering their information.

“But the vast majority of employers are yet to go through automatic enrolment, with tens of thousands of medium sized companies due to stage in 2014. Our call to action to employers to know your staging date and make a plan are more relevant than ever.”