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If you get it wrong however, it can be a nightmare for your company’s finances, given the time it will take to unravel poor decisions.

Here are some key points to consider when looking at your auto-enrolment solution:

  1.      Know your staging date – This may sound obvious, but a large number of employers, especially the smaller ones, do not know when the duties will affect them.  If you don’t know when the rules will affect you it becomes very difficult to plan and budget!  Leave yourself at least 12 months to plan for the changes that you will need to implement.
  2.      Choose your pension provider wisely – This may seem simple, but it isn’t.  For example, although  NEST will accept any size of scheme, it provides very little support for both the assessment of your employees and the communications you will need to send to them. Other pension companies provide these services, but you need to make sure they integrate with your payroll provider.  If there is no integration, it can be very time consuming trying to make things work manually.
  3.      Choose your payroll provider carefully – Not all payroll providers are equal and some can be very expensive if you use their auto-enrolment modules.   If you do not review your payroll provider and work out exactly what you want them to do, you could be making a very costly mistake.  This can be compounded if you do not start your preparations early enough to change payroll providers. The simple rule: give yourself plenty of time to review systems and processes.
  4.      Think about changing your payroll process – Weekly payrolls and a combination of weekly and monthly payrolls can be extremely time consuming and difficult to administer.  If you are thinking about changing your payroll process, you will need plenty of time to discuss it with your employees, so they can arrange their finances accordingly.
  5.      Review the pension provider’s default investment – In a way, you are making investment decisions on behalf of your employees.  If you get this wrong it could lead to some uncomfortable conversations in the work place.  Some specialist auto enrolment pension providers only have one fund available.  If the fund performs poorly there is no alternative!
  6.      Consider using postponement – Postponement can be used to reduce your employer pension contributions, especially where there are transient workers or spikes in earnings.  This can be very useful, but If not used correctly it can cause administration issues and costly manual intervention.
  7.      Decide on the contribution structure to use for your scheme – If cost is a key consideration for you, then choosing the contribution structure can be a vital tool in reducing your financial burden.  If you get this wrong, any future changes may lead to a lengthy employee consultation.
  8.      Recruit and retain – Ultimately auto-enrolment has been  introduced to ensure that all UK workers have enough money to live on when they retire.  Rewarding employee benefits packages are an incredibly useful tool to help you recruit the best staff and keep them. Just remember that happy employees are productive employees.  If you are doing the minimum then they may just find a better option!
  9.      Finally keep this thought in the back of your mind – Auto enrolment is for life, not just for staging date.  Lack of preparation, poor planning, not enough time and poor decision making can lead to an auto enrolment migraine that can be very difficult to fix and even more expensive to resolve.
IFA Brentwood Essex CM14 Laurence Sanderson
Laurence Sanderson IFA Brentwood, Essex CM14

Laurence Sanderson,  Head of Auto Enrolment, Sterling & Law Group plc.

This information is for guidance and information purposes only and should not be taken as advice and does not constitute a recommendation.

Information concerning legislation is based on our understanding of the current law and is subject to change

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