Hairdressers take firm hold of auto-enrolment with own mastertrust

Auto-enrolment began extending to small and micro-employers last year amid predictions that non-compliance would rise sharply as a result of smaller companies' lack of resources. Initial releases from the Pensions Regulator seem to support this as the number of non-compliance notices rose sharply in the final three months of last year.

The scheme, which guarantees entry for salon businesses, was launched at the end of May and has seen 83 companies sign up so far.

There’s already concerns about the lack of scale that some of the mastertrusts will achieve

Mark Pemberthy, JLT Employee Benefits

Hilary Hall, chief executive of the NHF, said hair and beauty businesses typically had a range of factors that made them unattractive to providers such as their small size, young and low-paid workers, high levels of maternity leave and a wide range of different software systems.

“These factors make salon businesses unattractive to pension providers,” she said. “As the smallest businesses will go live last, the NHF was concerned that salons would find it increasingly difficult to find pension providers who would take them on.”

The scheme includes software to help with implementating the scheme.

The NHF promoted the scheme through a number of channels, Hall said, including the members' magazine and through its website. A separate scheme website was also launched.

She added: “We have run a programme of face-to-face evening events, presented by Wren Sterling pension experts, free of charge to members, around the UK, including webinars.

“We’ll continue to run these events until 2018.”

Hall said the scheme was also promoted through an email newsletter and via social media.

However, some experts raised concerns over groups starting their own schemes, rather than approaching established mastertrusts.

Auto-enrolment for SMEs

Morten Nilsson, chief executive at mastertrust Now Pensions, said: “One of the biggest issues will be ensuring that small firms are aware of the options available to them when it comes to selecting a pension provider."

He added the regulator should, as a minimum, publish a list of those that have the mastertrust assurance framework, to help small and micro-employers identify quality providers.

“It’s a great pity that the Pensions Regulator decided not to proceed with a list of providers that accept all employers for auto-enrolment as we felt that this would have been hugely beneficial,” he said.

Mark Pemberthy, executive director at consultancy JLT Employee Benefits, said most small and micro employers were going into existing mastertrusts rather than setting up their own.

“There’s already concerns about the lack of scale that some of the mastertrusts will achieve,” he said.

He doubted there would be too many areas where an "affinity group" – collections of similar employers or businesses – would need to establish a scheme from scratch.

However, Pemberthy said having a scheme associated with the industry or a relevant trade body could help engagement.

“I see the benefit of getting the message for the employer and the members communicated. It’ll have a clear benefit for engagement and understanding,” he said.