Auto enrolment - Some thoughts
Auto enrolment is a hot topic amongst HR professionals at the
moment. In this blog we aim to explain (albeit briefly!) what Auto
enrolment actually is and offer some handy tips from people who
have been through the process already.
What is it? Auto enrolment is a scheme which was established to
try and encourage people to save more money for their retirement.
Employers are required to enrol much of their workforce but
employees do have the right to opt out of the scheme and have their
membership cancelled. Larger employers have to enrol first and they
have been doing so from 2012, the smallest organisations will start
from April 2017.
Challenges: Heineken's Head of Pensions, Carol Young said a key challenge she found was
drawing together all the different stakeholders who work on
pensions together to ensure they were all working to the same
agenda and timeframes.
Rachel Brougham, Head of the Auto-enrolment team at Mercer, pointed to the importance of payroll data being
kept up to date and that employee data has been cleansed in
general. The change in pension scheme can flag any discrepancies in
employee information and such irregularities can really slow down
and complicate the changeover in general.
Some companies have pointed to the difficulty in interpreting
the rules around the new legislation even when enlisting the
services of specialist consultancy firms. The Department of Work
and Pensions is probably the best port of call for any queries.
Another key issue is the time involved in overseeing the
changes. End to end it took Heineken 18 months to overhaul their
pensions offering, most experts suggest a ball park estimation for
most businesses would be 9-12 months. It's important to not give in
to the temptation to simply put off the process and it can take a
lot longer than you initially think.
Employee Engagement:It's also important that the process is
communicated effectively to employees. Not only to ensure you are
keeping up with your business' legislative obligations but so that
a confusing and complex subject matter is explained to people with
as much clarity as possible. John Lewis set about creating an
engagement campaign, which involved conducting an international
marketing campaign and internal survey. This was all done
with the view of changing the way people think about pensions and
to ensure they understood how the changes would affect them
positively. Dinesh Visavadia, Head of Pensions at John Lewis said
"If you engage with the workforce in a positive way, with a
positive experience, you will get a positive outcome and very low
opt out rate". Another idea is to hold pension forums and liaise
with trade unions to help people understand the changes.
Communication really is the key in ensuring people embrace the
Compliance: is another key concern, it's important to keep
records which allow a full audit to be undertaken if necessary.
Guidance offered by the DWP offers advice on the practical
implementation of the scheme but companies should ensure they
protect themselves and in-build compliance into their
More broadly, it offers businesses a great platform to showcase
their other benefits to staff and ensure they are getting the most
from the company's reward scheme. Employees should be offered the
appropriate channels to consult outside of your organisation, for
example the Money Advice Service for any queries they may have.
This should enhance engagement in the scheme as people are more
likely to trust the advice given as it would be impartial and not
associated with your company. This should be taken as an
opportunity to think about your pension offering in general and
what you want to achieve from them. This could be a chance to
review your services and get a better deal for your employees and
conduct a broader audit on benefits in general.
Final Top Tips:
- Find out what proportion of your staff Auto-enrolment will
apply to, this will require analysis of the workforce's age and
- Establish when you need to begin the process, what timescales
will you be working to? The Pensions Regulator will write to you 12
months before. Remember you will need to write to staff informing
them of any changes
- You will need to establish what contributions will be. Your
company may need to undertake extra budgetary procedures in order
to facilitate the extra costs involved. Costs are 'phased in' and
you will need to know how much you will be contributing over the 4
years that Auto-enrolment is introduced.
- Research pension schemes and check your current one meets the
Auto enrolment is here to stay and it's better to prepare for
such challenges fully. Hopefully some of the points raised
will help you make the switch over as painless as possible.
 In an interview with the NAPF Website
 From an article on Employee Benefits