Bringing together providers to meet your AE duties

So far Nest has more than 1,000 participating employers and close to half a million members.

By the end of 2018, the vast majority of employers will have offered their workers a pension and the face of workplace saving will have changed fundamentally.

At the moment only the largest employers, such as those in retail, hospitality and cater-
ing have been affected, but by 2018, most 
employers, including chip shops, charity shops and hairdressers, will need to enrol eligible workers.

The largest employers will likely already have a pension scheme set up, providing for some of their staff on a voluntary basis. However, as a result of the reform, these employers now need to expand their offering to encompass nearly all of their workers.

The smaller employers, who previously may have had no interaction with pensions, will also be legally required to offer most of their workers a pension as the changes are rolled out to smaller organisations across the next few years.

Nest’s public service obligation means it will accept any employer that wants to use it, regardless of employer size. That means the scheme is working alongside other providers, particularly with large employers who often have more than one scheme in place.

The majority of large companies Nest is working with have used the scheme to sit alongside their current arrangement.

Employers have sometimes found their current provider is unable or unwilling to offer an auto-enrolment solution to all staff. In this situation, the employer needs a second arrangement to cater for other eligible staff.

Working in partnership with other providers in this way ensures all eligible workers can be enrolled and are able to save into a workplace pension.

Using 'waiting period' schemes

There are a number of reasons why employers may choose to have more than one pension scheme for their workers. Some employers have a qualification period of up to two years’ employment before workers are eligible to join their workplace scheme.

Auto-enrolment means these organisations are legally required to enrol the vast majority of their staff into a scheme from the first day of employment.

For this reason, many use the automatic 
enrolment option as the ‘waiting period’ scheme, which allows them to enrol workers as part of the waiting period of the workplace scheme.

Other employers allow workers to carry on working after they have taken their pension. These workers will often be eligible for auto-enrolment, even though they are drawing an income from the existing workplace scheme. As a result they will need to be enrolled into a scheme.

For other employers, the existing company pension scheme may only be open to the top executives and long-standing staff, usually with a large benefits package. In these instances the provider or the employer may be unwilling to extend this to all of their workers.

As a result remaining workers will need to be enrolled into a separate scheme.

In all of these cases, we work together with other schemes in an attempt to alleviate the administrative burden on the employer and ensure all staff have accessible to a good quality 
scheme.

Auto-enrolment has meant employers who previously had little to no engagement with pensions will be tasked with ensuring the vast majority of their workers are provided with a pension.

The opt-out rates across the industry of around 10 per cent are a very welcome start, but there is a lot of work still to do.

Next year will see thousands more employers sign their workers up and the industry is gearing up for this change with enhancements to systems and communications so that employers, and the industry, are ready.

Graham Vidler is director of communications and engagement at Nest