For many business owners, auto enrolment is not only seen as an unwelcome, additional cost but also as red tape they could well do without. It’s also not as straightforward as many think either.
Karen Robinson, Cullen Wealth’s auto enrolment expert, explains: “It’s a simple concept that’s been wrapped up with rules and regulations some of which don’t appear to make sense.”
Myths and misconceptions
According to Karen, there are a few misconceptions around. “Many employers think if they already have staff pension arrangements in place they can bolt on auto enrolment but this is not always the case.
“There is also a tendency to focus on the staging date when really that is only the start,” says Karen. “It’s something employers will have to deal with after staging and continue to keep on top of, in order to remain compliant.”
Will DIY work?
Asked the question if employers can set up schemes themselves, she answered: “Of course they can but with over half a million employers doing this at the same time and only a limited number of providers, it won’t be like some business purchase decisions which amount to, ‘I want one, I’ll just pick this one up’ they really need to plan ahead and find the best fit for their situation.”
“And while the Government-backed NEST scheme is suitable for many, at the moment it isn’t the most flexible in terms of contribution levels, transfer arrangements and fund choice.”
Where can it all go wrong?
Many employers are not aware that things can go wrong and that there are advantages to outsourcing the risk of non compliance.
“It’s true that things can go wrong with how the pension scheme is set up. In my experience, the biggest issue is around the integration between payroll and pension arrangements and I’ve been asked to unravel a few cases of this,” she admitted.
Is all support equal?
Karen described the support that is available to employers: “It comes from pension providers and independent financial advisors but because of payroll and integration issues, I’ve found it helps to understand this aspect thoroughly (Karen was previously a Partner in an Accountancy practice advising owner managed businesses) while also operating from a position of pensions expertise (Karen now manages Cullen Wealth’s Corporate Pension service), to make sure the process is managed properly.”
“I suppose that is how we differentiate what we do – we’re experts in this!”