Warning of AE ‘train wreck’ in January

Warning of AE ‘train wreck’ in January

The Chartered Institute of Payroll Professionals has warned of widespread non-compliance in auto-enrolment from January, as thousands of small businesses prepare to hit their deadlines.

During the CIPP conference on auto-enrolment in London, industry leaders said small businesses would struggle to meet the demands of enrolling their staff into a pension.

Steve Brice, business development manager at Bristol-based LP Auto-Enrolment Solutions, warned it could be a “train wreck as there is widespread non-compliance among the smallest businesses”.

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He said: “We have had two years of auto-enrolment so far and all the largest employers went first, which means around 3 per cent of employers have staged so we do not even have a significant sample.

“In January the number of stagers goes up tenfold, so we have got 99,000 that have to stage between January, February and March, but the 3 per cent that have staged to date are the ones with resources and HR departments.”

Mr Brice added that there were a number of reasons why complying with auto-enrolment was harder than it should be, citing the example that auto-enrolment worked from the first day of each month while payroll departments worked from the sixth day of each month because they worked in tax years.

It has been claimed that between January 2016 and March 2018, the number of employers reaching their staging date will average more than 100,000 a quarter, reaching more than 200,000 in the first few months of 2017.

Andy Agathangelou, founding chairman of the Friends of Auto-Enrolment at CIPP, said: “Much of it relates to the mindset of small and micro-businesses which look at pensions and auto-enrolment as something they have not typically embraced, and see it as unnecessary and would rather not do it.

“There are 350 pages of detailed guidance notes explaining auto-enrolment and The Pensions Regulator has done a good job of simplifying it, but it will still be difficult.

“These businesses will find an accountant or IFA, but they will struggle to get the support they need because those accountants and IFAs will be dealing with the rest of the industry and running around like headless chickens.”

Adviser view

Nigel Sycamore, director of West Yorkshire-based Clear Workplace, said: “There is definitely the potential for large amounts of non-compliance, but what we are seeing is more of the advisory community stepping up to try and deal with it.”