alan collins coverage.
auto-enrolment opinion
“Some auto-enrolment solutions cannot cope with multiple pay reference periods; some are unable to manage the opt out/opt in processes effectively; some are inflexible when the customer is importing data for the assessment processes; some are unable to deal with multiple postponement periods for different categories of workers; some are unable to integrate with other arrangements such as legacy schemes or other providers systems; some are unable to deal with complicated contribution or multiple contribution structures such as those required for TUPE transferred staff or grandfathered arrangements and some don’t offer adequate levels of security with their data transfer processes. The supply and demand problem, coupled with the list of delivery and process issues means that finding the right auto enrolment solution and supplier is now an urgent task for most employers. It’s not something employers should consider to be a longer-term issue in their future business plans. Auto-enrolment is an immediate issue that requires their urgent attention now. Are we getting the message across as an industry? Are we offering fitfor-purpose solutions? Time will tell.” Close Brothers Asset Management head of corporate advice Charles Gillespie
“If I was looking at a wish list to simplify AE further, I would go for applying AE to all earnings – you are either in or out – and I would encourage savings by low earners even if there is no implicit tax incentive. This could be enhanced by government meeting the 1% ‘tax relief’ contribution even if employee earns below the tax threshold. If no tax incentive, low earners could always chose to opt out. Also opting out should be simpler – I still fear complaints in future from those who say they were ‘forced’ to join by not having proper opportunity to opt-out – there is a compensation culture out there and the government needs to be alert to this. Finally, allow flexibility for retrospection or ‘catch up’ on an annual basis (or on earlier leaving of employment) if contributions have not been met correctly. Forcing employers to immediately make good incorrect contributions will be a minefield and will often cost more to correct that than the ‘original mistake’.” Spence & Partners head of employer advisory services Alan Collins
“I would like communications to not be so prescriptive –statutory disclosures are useful and appropriate and the DWP has drafted some standard letters for employers to use when writing to their employees. However, the tacit threat from The Pensions Regulator that deviation from these standards is frowned upon has left employers unsure how best to communicate with their employees. Engagement is the secret to the success of a new pension plan. Also, having good quality schemes from day one –there is concern that where good quality pension schemes are being established for staff, that provides more than the minimum, could be seen as a barrier to joining. Let’s say the employer has taken the opportunity to establish a good quality pension scheme with contributions at 3% for employees with a matching 3% from the employer. This could be seen as an encouragement for workers to opt-out, at least while the phased contribution period continues. This is clearly preposterous and is well understood that the sooner a decent level of contributions are paid the better for the member. There needs to be clear guidance that this is not the intention of The Pensions Regulator’s powers.” Broadstone Corporate Benefits technical consultant David Brooks
Room for improvement The Department for Work and Pensions (DWP) recently launched a consultation seeking views on proposals to improve the automatic enrolment process, particularly around flexibility on pay reference periods. Pensions Age asks: What proposals do you have to improve auto-enrolment?
68
p68-69_improving.indd 2
pensions age may 2013
www.pensionsage.com
03/05/2013 17:34:59
“Some auto-enrolment solutions cannot cope with multiple pay reference periods; some are unable to manage the opt out/opt in processes effectively; some are inflexible when the customer is importing data for the assessment processes; some are unable to deal with multiple postponement periods for different categories of workers; some are unable to integrate with other arrangements such as legacy schemes or other providers systems; some are unable to deal with complicated contribution or multiple contribution structures such as those required for TUPE transferred staff or grandfathered arrangements and some don’t offer adequate levels of security with their data transfer processes. The supply and demand problem, coupled with the list of delivery and process issues means that finding the right auto enrolment solution and supplier is now an urgent task for most employers. It’s not something employers should consider to be a longer-term issue in their future business plans. Auto-enrolment is an immediate issue that requires their urgent attention now. Are we getting the message across as an industry? Are we offering fitfor-purpose solutions? Time will tell.” Close Brothers Asset Management head of corporate advice Charles Gillespie
“If I was looking at a wish list to simplify AE further, I would go for applying AE to all earnings – you are either in or out – and I would encourage savings by low earners even if there is no implicit tax incentive. This could be enhanced by government meeting the 1% ‘tax relief’ contribution even if employee earns below the tax threshold. If no tax incentive, low earners could always chose to opt out. Also opting out should be simpler – I still fear complaints in future from those who say they were ‘forced’ to join by not having proper opportunity to opt-out – there is a compensation culture out there and the government needs to be alert to this. Finally, allow flexibility for retrospection or ‘catch up’ on an annual basis (or on earlier leaving of employment) if contributions have not been met correctly. Forcing employers to immediately make good incorrect contributions will be a minefield and will often cost more to correct that than the ‘original mistake’.” Spence & Partners head of employer advisory services Alan Collins
“I would like communications to not be so prescriptive –statutory disclosures are useful and appropriate and the DWP has drafted some standard letters for employers to use when writing to their employees. However, the tacit threat from The Pensions Regulator that deviation from these standards is frowned upon has left employers unsure how best to communicate with their employees. Engagement is the secret to the success of a new pension plan. Also, having good quality schemes from day one –there is concern that where good quality pension schemes are being established for staff, that provides more than the minimum, could be seen as a barrier to joining. Let’s say the employer has taken the opportunity to establish a good quality pension scheme with contributions at 3% for employees with a matching 3% from the employer. This could be seen as an encouragement for workers to opt-out, at least while the phased contribution period continues. This is clearly preposterous and is well understood that the sooner a decent level of contributions are paid the better for the member. There needs to be clear guidance that this is not the intention of The Pensions Regulator’s powers.” Broadstone Corporate Benefits technical consultant David Brooks
Room for improvement The Department for Work and Pensions (DWP) recently launched a consultation seeking views on proposals to improve the automatic enrolment process, particularly around flexibility on pay reference periods. Pensions Age asks: What proposals do you have to improve auto-enrolment?
68
p68-69_improving.indd 2
pensions age may 2013
www.pensionsage.com
03/05/2013 17:34:59
