Compass becomes Nest's biggest win

The firm, which has 55,000 eligible staff out of approximately 90,000 across 5,000 sites, has a November staging date but is taking opportunity of the three-month window to delay.

A company spokesperson said: "Compass has selected Nest as its provider for pension automatic enrolment and we are working to ensure we have the right systems and processes in place to meet these new regulations."

The company has approached auto-enrolment with caution owing to the transient nature of its workforce, many of whom are on short-term contracts. It has also expressed concern at whether Nest would help it meet all its legal obligations under auto-enrolment.

In evidence submitted to the pensions select committee last year, Compass Group said auto-enrolment was likely to cause a “significant and costly administrative impact on our business”.

The evidence states: “The administrative burden of auto-enrolment should not be underestimated for a business such as ours, which has a highly transient workforce with variable earnings patterns and many employees on the cusp of earnings limits.

"We ask the government to consider simplifying the arrangements wherever possible so that the compliance burden is minimised within the overall policy objectives.”

To mitigate the impact, Compass called for a number of concessions:

• A six-month waiting period before enrolling employees;
• The ability to delay enrolling transferred employees until the next re-enrolment period;
• The ability to provide employees with pension pots at, or close to, the lifetime allowance with opt-out forms;
• Reassurance that Compass would not be in breach of regulations due to ‘any potential failures’ by Nest;
• The ability for employees to be able to make transfers into Nest;
• Confirmation that the government supports Nest’s lower-risk investment strategy for employees in their twenties;
• The ability to enrol workers once they meet the lower earnings limit in the tax year – “It is difficult to estimate their earnings at the beginning of the tax year and earnings from the previous year are no indication to earnings in the following tax year.”;
• A delay in the real-time information changes for HR and payroll departments, due to the impact of its launch close to that of auto-enrolment.