Employers must think imaginatively about pay and benefits if auto-enrolment is to be a win-win for employer and employee – that’s the message from pensions expert Rob Atkins of employee benefits specialist Fidelius.
With the introduction of auto-enrolment now little more than a week away, Fidelius has launched a seven-point guide to help companies navigate their way through the Government’s shake-up of the UK’s pension system. Auto-enrolment obliges employers to enrol eligible staff in a qualifying pension scheme and comes into effect on Monday, October 1st.
Mr Atkins comments: “The introduction of auto-enrolment heralds new opportunities for companies as well as new responsibilities. Fidelius has already worked creatively with businesses across the South West to help them implement auto-enrolment and the results have been positive for staff. When auto-enrolment is considered in the broader context of benefits packages, National Insurance contributions and salary sacrifice schemes, then the financial impact on both the employee and employer is significantly reduced.”
While only the UK’s largest companies – those that employ 120,000 people or more – will be obliged to auto-enrol from October 1st, all companies will be phased into the new pensions regime over the following five years as they reach what the Government is calling their ‘staging dates’. But Mr Atkins says that businesses that are ahead of the curve when it comes to planning for the new pensions regime will be best-placed to cope with the ramifications.
“There is much to be gained by starting to plan earlier for AE, especially budgeting,” said Mr Atkins. “There may be a number of pay/remuneration reviews between now and most employers’ staging date. Splitting the remuneration pot between pay rise and increased pension contributions to meet the minimum requirements of auto-enrolment will mean an employer can meet legislation early or over a longer period within a clearly defined budget.”
Fidelius’s seven-point plan takes employers through the switch to auto-enrolment. The first step is about a firm identifying when they need to act, the seventh about how to make the correct pension contributions. Good communication with employees during the process is crucial, and the plan advises companies how to do that.
Auto-enrolment is intended to make the process of saving for their retirement more straightforward for employees. Currently, many workers miss out on valuable pension benefits because they do not sign up to a scheme run by their employer.
Fidelius director Iain Fox added: “Auto-enrolment is designed to plug the savings gap caused by apathy and lack of early planning for retirement, and in some cases, not saving at all. It is an ambitious programme and represents a sea-change in pension policy.”
