Regulator: the AE capacity crunch has not materialised

The term ‘capacity crunch’ became a catchphrase. The pensions media was awash with suggestions that employers would struggle to find advice and fears that many medium-sized businesses would leave it late and battle to find a scheme provider.

Undoubtedly, the workload of my compliance and enforcement colleagues will rise

All the signs now are that instead of ‘the crunch’ causing a meltdown among providers and advisers with anguished employers queued at their doors, professionals have been ready to help employers meet their new duties and products have been developed to satisfy demand. The feared mass problems have not materialised.

Of course, it has not all been smooth sailing. The rollout of automatic enrolment has coincided with other changes to the pensions landscape.

There have been employers who have struggled to ensure their systems were in place on time, pensions and payroll providers have faced new challenges, and a number of employers have found it hard to get their data presented correctly so that their payroll systems and pensions scheme can ‘talk to’ each other. But, the hard work has paid off – so far.

Our latest declaration of compliance report shows that by the end of August, almost 4.5m workers had started to save into a workplace pension as a result of auto-enrolment.

We have begun to see large numbers of medium employers – who do not have a history of offering their workers a pension – introducing workplace pensions for their staff.

All this has happened without the need for The Pensions Regulator to use its powers to enforce on anything other than a tiny proportion of occasions.

Undoubtedly, the workload of my compliance and enforcement colleagues will rise. This is to be expected, and is in line with the growing numbers of employers approaching both their staging dates and their deadline to complete their declarations of compliance.

We will be seeing more compliance notices issued. I continue to stress to employers that they should start their preparations early and not leave plans for auto-enrolment until the last minute. 

Those that leave it late are the ones who most often find it difficult to be prepared. We will take appropriate action against employers who fail to automatically enrol their staff on time. I expect to see an increasing number of employers that we may need to fine. We believe this slap on the wrist will encourage those employers who may think auto-enrolment is not for them, to think again.

We know the majority of employers want to do the right thing and meet their duties. To do this, they will be looking for assistance not just from us, but from the wider pensions industry, pensions and software providers, accountants, bookkeepers, IFAs and other advisers. 

Charles Counsell is executive director for auto-enrolment at the Pensions Regulator