Key points
• Auto-enrolment will present employers with two main costs: the impact of employer contributions, and the associated costs, which can include administration and ensuring regulatory compliance.
• An auto-enrolment technology solution can draw information from an employer’s payroll and HR systems, determine the requirements and process information to help manage the new responsibilities faced by employers.
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Realising the potential in reform means technology that takes the complexities of automatic enrolment away, without taking the workplace pension scheme apart, says Colin Williams
Pensions have found themselves in unfamiliar territory – on the front pages – over the past six months. From grim figures from the Office for National Statistics showing low levels of people paying into workplace pensions (Occupational pension schemes survey 2010, published October 2011), to the public sector trading blows with the government on proposed cuts to its schemes, the cold comfort is seeing pensions sneaking back into the public consciousness.
How this trend continues hinges on the reception of auto-enrolment; but the focus has to be on making sure big change for saving does not translate into big change for employers. We are seeing positive signs from employers in readying for reform, but there is a real chance that many will be hamstrung by the costs of auto-enrolment.
The costs fall broadly into two camps. The impact of employer contributions will affect organisations to varying degrees and are, ultimately, unavoidable. Associated costs, ranging from administration to ensuring regulatory compliance, are where the impact is not predetermined and there is an opportunity to soften the blow.
Auto-enrolment should not mean taking a workplace pension apart, upsetting established pension schemes or the flexible, integrated benefits of corporate platforms. A facility to draw information from payroll and HR systems, determine the requirements and process information through to systems, creates a discrete layer that manages regulatory responsibilities.
But a new layer does not mean new complexity. Solutions for auto-enrolment that are system agnostic and sit under the scheme can remain unaffected by future propositional changes, providing a consistent, straightforward way to channel auto-enrolment data to different schemes. This means identifying the requirements for each employee and processing opt-ins and outs, storing data and producing analysis and management information.
Corporate platforms and forward-thinking pension propositions embrace new technologies, and any auto-enrolment solution should be through an online portal with clear links to the platform.
Good-quality pension schemes can be a badge of honour for a business. Post-auto-enrolment, with every employer having to offer a scheme and make contributions, the distinction becomes blurred. A hub solution goes further than meeting the regulatory obligations. It frees up platforms to continue evolving a range of benefits to set schemes apart, from financial engagement to communications and investments.
The jury is still out on whether auto-enrolment will live up to its billing as a solution to the UK’s savings slumber. For employers, taking the sting out of reform does not just mean they can get on with what they do best. It gives the financial futures of millions of workers a fighting chance.
Colin Williams is managing director, corporate benefits, at Friends Life
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