From the blog: Two-and-a-half years into auto-enrolment and the pensions industry can look back and say, 'So far, so good'.
Large and medium-sized employers have staged successfully, but what happens when we look forward?
The employer staging profile is about to ramp up...
It is now the turn of small and micros. As the number of employers staging increases, and their sizes decrease, it is important the industry understands the challenges they face and responds accordingly.
Large and medium-sized employers have staged successfully, but what happens when we look forward?
The employer staging profile is about to ramp up...
Source: Nest
It is now the turn of small and micros. As the number of employers staging increases, and their sizes decrease, it is important the industry understands the challenges they face and responds accordingly.
Doing so should ensure that three years from now we can all once again look back and say, ‘Job well done’.
It is worth pointing out that small and micro employers are really supportive of workplace pensions. Just fewer than seven out of 10 agree that workers should have access to a workplace scheme.
That said, they want auto-enrolment to be as smooth as possible, and understandably they want a scheme that is straightforward and easy to use.
We, as an industry, need to listen to this and decide what tools we can build to help this new cohort meet their duties.
... And small and micro employers may not be prepared
Source: Nest
The next wave of employers will be unlike any that have come before. There are three distinct differences: experience and knowledge, existing business processes, and time and expertise.
Nest Insight 2015, released earlier this year, found these employers have high levels of awareness but low levels of preparedness.
Nine out of 10 are aware of the reforms, but dig a little deeper and it is clear that awareness does not equal understanding.
Fewer than two in 10 feel they completely get what auto-enrolment means for their business, let alone what they need to do to comply.
The smaller the employer the more likely they are to hold informal conversations, rather than have more formalised HR communication strategies
Indeed, many small and micro employers may have little experience of pensions in general. Eight in 10 employers yet to stage don’t have an active scheme in place.
A new approach
Not only do employers need the processes to be straightforward and hassle-free, but they also need information that is clear and jargon-free.
We also need to consider how employers talk to their workers. The smaller the employer the more likely they are to hold informal conversations, rather than have more formalised HR communication strategies.
So it is likely most small and micro employers will need to develop new ways of communicating in order to comply with the legislation. Many may turn to the industry for help.
Lastly, many small and micro employers will have just one person running everything, from money to marketing.
Smaller employers are likely to be concentrating on what they do best, running their business. We need to recognise that they’ll have fewer resources to tackle the new duties.
The industry can help with this in two ways: make it simple for them to do it themselves and make it easy for an adviser to step in.
Nest Connect was specifically developed to help intermediaries support their employer clients, and advisers tell us it helps them offer an efficient auto-enrolment solution to their clients.
As the volume of employers ramps up, scalable tools can help intermediaries work with their clients to meet their new duties.
Small employers are absolutely crucial to the ongoing success of auto-enrolment. We must all be ready to help them.
Helen Dean is executive director for product and marketing at Nest
