Industry submits AE simplification wishlist

The pensions minister said the government would "practice on the big guys, learn our lessons and then do a round of simplification" to help smaller employers, which do not have as large a compliance budget to meet the letter of the legislation. Some large employers have reported spends of more than £1m implementing the reform.

"By the time we get to the medium and smaller-sized firms, those irritating niggles that don’t really need to be there, things that aren’t very clear, we can iron [those] out," Webb told the National Employment Savings Trust Insight conference earlier this week.

In response, a number of organisations have suggested areas of concern for the government to target:

• Allowing smaller schemes to carry out certain auto-enrolment employee checks annually rather than every pay period.
• Lifting the Nest restrictions, which the scheme has claimed are a barrier to smaller companies adopting it for their employees.
• A less prescriptive and more pragmatic approach, particularly around administration.

Adrian Boulding, pensions strategy director at Legal & General, said the current rules mean that every pay period an employer has to check whether an employee has reached the age of 22 or the earnings threshold.

He added: "It would be enormously helpful for small employers if some of that could be made annually, rather than weekly as it is for some small employers who typically pay their workforce weekly."

Lessening your auto-enrolment burden

The Confederation of British Industry raised concerns about how “onerous and prescriptive” the legislation underpinning auto-enrolment is for smaller employers.

"The CBI is urging the government to move those administrative requirements that would need adapting in the short and medium term, such as Nest governance and contribution rates, out of primary and into secondary legislation," said a spokesperson.

“In addition, some of the administrative requirements could be simplified for all firms, especially smaller companies.”

The Trades Union Congress suggested lifting Nest restrictions could also make the process easier for smaller employers. The Department for Work and Pensions closed its call for evidence on the subject on Monday and will publish its response in the coming months.

But there is concern focusing too much on issues raised by the larger employers may not help smaller ones, where business profiles and practices are different.

No one employer had approached auto-enrolment in the same way, said John Harding, director in PwC's human resource services practice.

He added: "In making any changes to the legislation our key message would be proceed with caution."

A spokesperson at the DWP said its plans were not "wholescale or radical" and no specific targets had been outlined.

It said: "If we come up against a roadblock it is about saying, 'Okay, how do we get around that'."