Derbyshire reduces auto-enrolment comms burden

Employers and schemes have made use of various legislative delays, postponements and communication cost savings to reduce the burden of auto-enrolment. There has also been a general trend in the local government sector towards reducing the amount of paper correspondence sent to scheme members.

The local authority shared its experience of auto-enrolment in a case study published on the Local Government Association website.

Derbyshire closed down "many hundreds" of records of casual or relief workers that it was no longer using, to avoid having to send auto-enrolment correspondence to these individuals.

"Clearing the system of unused records saves unnecessary administration, time and related costs," said a scheme spokesperson, adding this was part of an annual housekeeping process to keep data clean.

Although two-thirds of staff were already in their eligible pension scheme, the reform required the scheme to communicate with them.

"This exercise effectively created the equivalent of an extra payroll run and Derbyshire used that process to send letters to schools and other work bases where they could, to try and cut down on postage costs," said the report. "The cost of printing and postage costs was still over £11,000."

Like other local authorities, the council made use of the transitional delay open to defined benefit and hybrid schemes implementing auto-enrolment, which allows them to delay enrolling eligible jobholders.

Employees for whom it was used had "already made a conscious decision to not pay into a pension scheme" said a council spokesperson. "This option replaced the anticipated outcome of numerous employees confirming again their wish to remain opted out," the spokesperson added.

The council also made use of the three-month postponement for casual or supply workers. "This provides a financial and administrative saving as well as ensuring that it is those who consistently meet the eligible jobholder earnings trigger that are automatically enrolled," said the AE report.

Schemes across the sector are taking the option of the three-month postponement, according to Karen McWilliam, head of public sector benefit consultancy at Aon Hewitt.

"It will be providing cost savings, but it will also make it so much easier for the employees to understand what is going on," McWilliam said, adding it was also "best practice" to clear outdated records of relief workers that commonly pile up.

"You will generally quite often find that it's not quite clear when an individual actually terminates employment, because it may just be that they have not been called upon to do work for a number of months."

Employers and schemes that are able to collect a greater amount of data on staff and pension scheme members stand a better chance of cutting down auto-enrolment costs, by sending communication in bulk via an employer rather than individually.

"Your payroll records have got to be very granular if you are going to save money," said Michael Clark, managing director at Clark Benefit Consulting. An example of this would be "being able to identify people on the same site", he added.

But sending correspondence in this way could also improve the chance of it reaching the intended recipient. "You can guarantee it getting into the person's hands as opposed to putting it in the post," he said.