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Believe or not we are now about a third of the way through the planned staging process for UK employers. By 2018, every employer in the UK will have to provide a suitable workplace pension scheme and automatically enrol many of their workers. The first phase of auto-enrolment began in October 2012 with the largest employers and we are now seeing many medium sized companies (with less than 250 employees) reaching their planned staging dates as the numbers involved start to grow.

The rationale behind this programme of auto-enrolment is sound enough; almost 11 million of the adult population are not saving enough for retirement. So if millions of people are not to get a nasty shock when they retire we need some big changes. Pensions reform certainly represents a radical change to the UK pensions system but it is probably safe to say it has not been universally welcomed. There is also an understandable amount of anxiety around capacity crunch issues the industries capability to handle the large numbers of small employers staging in 2017, peaking at 135,000 per month!

At the end of June 2014, approximately 18,000 employers had staged with over 3.8 million employees having been auto-enrolled. Whilst these numbers might seem quite high it should be noted that this represents only just over 1% of the total number of employers that have to stage by 2018!

It has also been evident that fewer than expected have elected to opt-out. The Government recently dropped their predicted opt-out rate from 30% to 15% but actual experience is much lower at around 10%.

Factor into this that the average employer has so far found the whole process takes longer than expected and is more involved than at first thought and you can begin to appreciate the need for appropriate advice and guidance.

Many employers still refuse to acknowledge the need to start planning early and this is only likely to exacerbate an already precarious situation.

If you would like to discuss any of the content of this blog please feel free to get in touch with me at Credius Wealth Limited, Tel 0207 562 5858.

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