Government Failing To Recognise Complexities Of Auto-Enrolment

SMEs Could Suffer From Confusing Message And Face Fines For Non-Compliance

25.06.2013

By David Shirt

Leading law firm, Irwin Mitchell, believes that the Government’s assertion that businesses do not require advice on auto-enrolment points to a lack of understanding of the complexities of the far-reaching legislation.

Heralded as one of the biggest changes to the UK pensions’ landscape in over 60 years, auto-enrolment will mean that all UK employers must automatically place their entire workforce into a qualifying pension arrangement. All employers must contribute to that pension arrangement and must monitor and keep records of their workforce’s membership of the scheme.

The rules first applied to the UK’s largest companies in October 2012 and by April next year, organisations employing less than 250 staff will start to be affected.

Earlier this month Pension Minister, Steve Webb said that "nobody has to pay for advice" on auto-enrolment schemes as the government had "legislated for quality" with the schemes available.

The statement followed the publication of the Pensions Bill in May 2013 which included legislation to ban pension providers from being able to take a fee from employees’ pension pots for advice given to the employer.

Nigel Bolton, Pension partner at Irwin Mitchell, said: “Although the Pension Minister’s comments were specifically in relation to consultancy fees charged by pension providers, I do think comments like this are misleading and could be misconstrued.
 
“The experience to date by those employers who have staged already suggests that advice and assistance in complying with the auto enrolment requirements is required. There is no reason to suspect this will not be the case for smaller employers, especially when you consider that many will not have the financial or internal resources to face auto-enrolment issues. 

"It appears that in the absence of an affordable mass market  solution, employers must either pick up bespoke advice costs themselves, or even worse, risk being non-compliant in some way and face the wrath of the regulator.”