Mastertrust Nest has experienced increased take-up of its professional services online hub in the run-up to the biggest waves of auto-enrolment stagers next year, but micro employers’ preparations are still lagging behind expectations.
The auto-enrolment initiative began three years ago last week and is entering its final but most challenging phase with smaller employers.An average of 58 employers have enrolled each day since the policy started in 2012, but this will soar to 2,000 per day with the next tranche – an increase of 3,500 per cent.
We were expecting to see an increase before now. I think it hasn’t sunk in for a lot of employees yet
Daniel Taylor, Premier
There have been persistent fears the introduction of small and micro employers would lead to a ‘capacity crunch’, where the industry does not have the capability to provide services to all who need them.
Paul Budgen, head of business development at Nest, said registrations to the portal had risen from accountants and independent financial advisers preparing to help clients through enrolment.
He said: “We’ve seen lots of accountants and IFAs setting up shell accounts ready to go.”
But the same level of readiness has not been seen from the employers themselves. The mastertrust brought on around 2,500 micro employers in June this year as part of a “pathfinder” project with the Department for Work and Pensions to help understand the needs of micro employers.
Early indications showed these employers are likely to be less engaged than their larger counterparts.
Budgen said: “The initial feedback we’re getting is they’re making fewer calls to our team.”
Micros yet to appear
Daniel Taylor, head of administration services at consultancy Premier, said the expected micro employers seeking help with auto-enrolment had so far failed to materialise.
He said: “We were expecting to see an increase before now. I think it hasn’t sunk in for a lot of employers yet.”
He added that accountants might play a part in this because they often have a more wide-ranging role with smaller employers relative to large ones.
He said: “We expect them to be turning to their accountants for support, so it’s not a surprise they’re not coming to us.”
Girish Menezes, chair of the Pensions Management Institute’s London group, said auto-enrolment had been complicated by freedom and choice, and the shift towards pensions being seen as part of a larger savings picture.
He said: “You need to look at auto-enrolment now within a completely new framework. There’s freedom and choice, drawdown and the potential tax changes… It’s not just pensions anymore, it’s pensions, Isas, company share schemes. All of that needs to be looked at in a holistic manner.”
Ready to go
Nest has been designed to handle large volumes of employers and members since its inception, using an operating model Budgen describes as “digital, low-cost and outsourced”.
The scheme also continually seeks feedback and updates its processes.
Budgen said: “At a high level, we have our member and employer panel to feed on to the trustee board. We also have an in-house research team and commission external research to tell us about employers who are approaching staging and their concerns.”
