Time to simplify auto-enrolment (and you can help) | LabourBlawg

Time to simplify auto-enrolment (and you can help)

by scarfie on April 27, 2013

When it was announced as part of Lord Turner’s 2005 report on the future of Pensions, auto-enrolment was heralded as a lifesaver. It would save the economy, it would help people save for their own future, and it would be… complicated.

Everyone knew it would be complicated, and even at this late stage, where larger businesses have already implemented, we know there are still questions to be asked. There are loopholes to be closed, and there are issues that need clearing up.

Simon Parsons explains the technical nightmares that HR and Finance professionals are facing in the implementation of pensions auto-enrolment, which include:

  • no usage of pay dates or pay frequencies
  • non-conformity of pay reference periods to operation of Tax and NICs (National Insurance Contributions)
  • disregard to complexities of variable salaries, mixed working patterns, etc.

Pensions Minister Steve Webb, when speaking at an industry conference in February, told the audience of HR and Payroll professionals that there are still loose ends, including the transfer of pension schemes from one job to the next, and the combination of “small pension pots” into one larger pension pot.

Equally, he stressed that there may be issues of “men in shiny suits” turning up to sell pension schemes to smaller businesses, offering pension schemes that may be of low quality.

Despite these loose ends and preoccupations, Webb said that he was encouraged not only by the low numbers of people opting out but by the workplaces who had undergone effective communications strategies, reducing opt-out rates even further. So far, so good – but when the majority of UK businesses enter their staging dates, complications are almost certain to arise.

The Pensions Minister announced that they would seek to introduce just one round of legislation, rather than drip-feeding through Parliament. The consultation announced this week, ends on 7th May, and is the HR and Payroll professionals’ opportunity to have their voice heard.

The consultation aims to clarify pay reference periods, the enrolment joining window, and the form of the opt-out notice, as well as seeking views for simplification of the process.

As Simon says, it is important that Pension Reform works for UK business: the benefit to employees (and therefore, to employers) is significant. The workload, however, is not. Once again, government is reliant on business to carry the burden of legislative change, and this time, it really will be worth it.

The consultation closes on 7th May, so make your voice heard!

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