To help employers prepare for the new regulation which will come into effect in October 2012, Friends Life has launched a ten-point automatic enrolment checklist.
Martin Palmer, head of corporate benefits marketing at Friends Life, said:
“It’s important that employers start thinking about how they will manage auto-enrolment well in advance of when it goes live. Making sure there is a qualifying scheme in place and ensuring reporting and compliance regulations are met will require careful planning and preparation, but by starting early the new obligations can be smoothly managed.
“By getting on the front foot with preparations businesses can set themselves apart when it comes to pension provision and ensure their scheme is a real badge of honour. Having a workforce that is positive about saving for the future can only be a good thing when it comes to employee engagement and this is an exciting time to show employees how much they are valued.
“We know that such a big change can prove daunting but by breaking it down into simple steps and starting early there is absolutely no need for employers to feel panicked or overwhelmed. We hope that our ten point plan shows how straightforward it is to get started.”
Friends Life’s top ten steps to getting ready for reform:
- Set the stage. Each employer will be given a staging date at which point their auto-enrolment obligations begin. This could be from 1 October 2012 to 1 February 2016 depending on the size of the PAYE scheme. Employers who don’t know what their staging date is should find this out as a first step
- Get familiar. The reforms are far reaching and detailed. Employers should take some time to get themselves up to speed, and keep up to date with the latest developments as more changes are introduced.
- Know your workforce. Workers fall into three categories: eligible jobholders – who are enrolled automatically; non eligible jobholders – who can chose to opt into the automatic enrolment process and entitled workers – who have a right to join a company pension scheme, although not to receive an employer contribution. Knowing how employees fit into these categories is essential to gauge the impact on the business.
- Calculate the cost. Contribution levels, which are being staggered to smooth the financial implications on employers are not the only costs associated with auto-enrolment. The cost of resource, time and implementing systems and procedures also need to be taken into consideration.
- Set up a scheme. Companies which already have a pension scheme in place will need to check that it meets the qualifying criteria. Where a company doesn’t have an existing scheme they’ll need to set up a private occupational or personal pension scheme or sign up to the government system, the National Employment Savings Trust.
- Build a team. The size of a company will affect the human resources required, but it’s important to ensure there is someone in place to cover all bases, including administering the scheme, arranging contributions, automatically enrolling staff, implementing systems and meeting legal and compliance duties.
- Communicate change. Most people will be unaware of the upcoming changes and there are strict guidelines around communications to employees that need to be met. Keeping staff informed and up to date is essential.
- Prepare systems and procedures. Putting efficient and effective systems into place will help smooth the transition to auto-enrolment. It will simplify processes and provide ready access to information for compliance and reporting.
- Don’t go it alone. The scale of reform and tight deadlines can be overwhelming so seek professional advice (i.e. from your provider and/or adviser) to ease the pressure of organising a qualifying scheme and to ensure all requirements are met.
- Think differently. Whilst these reforms mean a lot of change there are a huge range of benefits that come from having a positive workforce which is engaged with saving and better prepared for their future. Employers can use this as an opportunity to set their scheme apart and pension provision can become a badge of honour and testament to the quality of the business.
Source : Friends Life
