This week the Department for Work and Pensions (DWP) published their Automatic Enrolment evaluation report 2015, which painted a relatively positive picture of the delivery of auto-enrolment.
"The Pensions Regulator has already used the formal powers they have to address non-compliance on 1,751 occasions."
The key findings are mostly focused on the number of new savers – so we find ourselves looking at things from the worker’s perspective. We see that more people are saving into pensions than was the case a couple of years ago, which is of course, a very good thing - even though average contribution rates for Defined Contribution (DC) schemes appear to be falling.
But what about the view from the employer’s side? We are told in the report that 'all large and medium sized employers have now staged' which suggests that all employers have staged without any issues. When reading the report more thoroughly, it becomes clear that this is not the case as The Pensions Regulator (TPR) has already used the formal powers they have to address non-compliance, on 1,751 occasions.
With more than 5.47 million eligible workers currently automatically enrolled across 60,000 employers, this does not sound like a bad record – until you realise that these 1,751 instances of non-compliance were identified from just 3,303 investigations undertaken by the Regulator. Not a good indicator of employer understanding and procedural awareness at all!
So what are the problem areas for employers? The report does not focus on this in too much detail – although it does look at the awareness of various aspects of auto-enrolment, prompting employers on whether they know that they have to:
- automatically enrol UK workers
- provide a pension scheme for automatic enrolment
- make contributions to their employees’ pensions
- will have to complete a declaration of compliance with the appropriate government body
- communicate the reforms to the workers on an individual basis
But does awareness equate to a full understanding? Some areas of auto-enrolment which are not covered include how to understand who is a worker, and also the categorisation of workers. Should we take the evaluation key findings - 'levels of employer awareness and understanding of their automatic enrolment duties continues to be high, showing appropriate progress towards them being able to comply with their duties' - at face value? It raises concerns that there are employers who decide to start the process, before becoming aware that there is more to it than they initially thought.
TPR launched a new communications campaign on 21 October 2015, aimed at SMEs as well as individuals which was perhaps, a bit of a departure from the 'we’re all in' message aimed more squarely at minimising opt outs. They have certainly invested heavily in this - a staggering £8.5 million on TV advertising alone – but it remains to be seen whether this campaign is effective in getting employers who have not staged to begin preparations early, and those who have staged to ensure that they have done things correctly.