Awareness of automatic enrolment high but employers warned to act now
Thursday 26 March 2015
The Pensions Regulator today warned tens of thousands of small and micro employers they must start preparing for their automatic enrolment duties.
New research published by the regulator shows that while levels of awareness of automatic enrolment remain high among all employers, more than 20% of those due to stage between June and November this year had not yet drawn up plans to meet their duties.
Every employer is given a date set in law when their duties start – this is their staging date. The regulator recommends that employers should start preparing for automatic enrolment 12 months ahead of that date.
The employer survey conducted in November last year shows that more employers are aware of their staging date thanks to letters sent by the regulator alerting them to their duties, but some remain unaware. Eight in ten smaller medium and small employers have consulted an adviser or will do so.
The research also shows a near universal level of awareness of the reforms among intermediaries while most also understood the key elements of the reforms, a step welcomed by the regulator as more employers say they will depend on intermediaries to comply with their duties.
However, accountants and bookkeepers continue to have the lowest level of understanding about automatic enrolment.
Charles Counsell, executive director for automatic enrolment, said: “While it is encouraging to see that awareness of automatic enrolment is improving, there are still too many employers failing to identify their staging date. As hundreds of thousands of small and micro employers prepare to stage in the next two years, we cannot be complacent.
“The regulator’s direct communication to employers is having a major impact and we are launching new online material as part of our educate and enable approach to help employers meet their duties. We will be writing to all employers in the coming months and so when a brown envelope from The Pensions Regulator arrives, employers should open it as it will advise on when their staging date is.
“We know from the research that employers will turn to advisers for help in meeting their duties and so I am encouraged to see that awareness among intermediaries is almost universal, but there is scope for better knowledge and understanding.
“The regulator’s website should be the first port of call for all employers and their advisers as it offers essential information about each task an employer will need to accomplish in order to comply and avoid penalties.”
Key findings from the employer survey:
- Awareness remained very high among smaller medium employers (97%), high among small employers (86%) and lowest amongst micro employers (65%).
- Among those staging between June and November 2015, over two thirds (69%) knew their staging date (an improvement from 43% in spring 2014).
- Eight in ten employers staging between June and November 2015 have commenced preparation to meet their automatic enrolment duties.
- Awareness increased significantly among those staging between June and November 2015 from 85% to 95%. A main cause of this is likely to be that all employers with these staging dates would have received at least one direct written communication from the regulator since the last survey wave informing them of their automatic enrolment duties.
- Eight in ten smaller medium and small employers have consulted an adviser or will do so. Two thirds (65%) of micros will also consult an adviser, with IFAs and accountants the main types used.
Key findings from the adviser survey:
- There was an almost universal level of awareness of the reforms among intermediaries, ranging from 95% among accountants to 100% among payroll administrators.
- Most intermediaries also understood the key elements of the reforms, with IFAs (96%) and payroll administrators (95%) having the greatest level of understanding, while bookkeepers (70%) and accountants (77%) continued to have the lowest.
Both surveys are available in our research and analysis section:
- Employer automatic enrolment research Autumn 2014
- Intermediaries automatic enrolment research Autumn 2014
- Medium employers are those with between 50 and 249 employees and small and micro employers are those with fewer than 50. Staging dates are based on PAYE information held by regulator from HMRC on 1 April 2012 and not on current staff headcount – employers must therefore not assume they know their staging date – they must check.
- The Pensions Regulator has an ongoing process of reviewing the effectiveness of its communications to employers, both direct and indirect to ensure it meets the needs of the different audiences affected by automatic enrolment.
- The autumn employer survey wave comprised 608 interviews conducted in November 2014, among smaller medium employers (with between 50 and 60 employees), small employers (with between 5 and 49 employees) and micro employers (ie between 1 and 4 employees).
- The autumn intermediary survey comprised a telephone survey of intermediaries operating in the UK, with 575 interviews conducted in total. Five different intermediary types were included in the survey. Interviews were conducted with those groups providing or planning to provide advice to external organisations about the automatic enrolment process, namely independent financial advisers (IFAs), human resources (HR) professionals, payroll administrators, accountants and bookkeepers.
- The Pensions Regulator is the regulator of work-based pension schemes in the UK. We have objectives to: protect members’ benefits; reduce the risk of calls on the Pension Protection Fund (PPF); to promote, and to improve understanding of the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to minimise any adverse impact on the employer’s plans for sustainable growth (in relation to the exercise of the regulator’s functions under Part 3 of the Pensions Act 2004 only).
Matt Adams 01273 662086