Chartered surveyor Dalcour Maclaren has secured a virtually entire take-up of its defined contribution plan since it auto-enrolled its small workforce last year, and now the company is looking to streamline administration of the scheme.
The company auto-enrolled its workforce in January 2013, almost three years before its required staging date of August 2015. This is in contrast to many other small employers that consultants and providers have warned are not adequately prepared for their staging dates this year.
To help choose a provider, administrator Nicola Putt said she looked at the experiences of larger companies that had already staged and narrowed the options down to mastertrusts Nest and The People’s Pension.
How to prepare
Consultancy Punter Southall gave SMEs a number of steps to successful staging:
Plan early
Work out what it is going to cost you
Choose a scheme
Choose a default investment option
Communicate with your staff
Talk to your payroll provider as soon as possible
Set up your scheme and payroll process
Issue the correct statutory communications
Enrol the right workers at the appropriate dates
Tell the regulator what you have done via their website
Dalcour chose The People’s Pension because its software allowed the employer and staff to view their pensions online, Putt said.
The system was also easy to administer and guidance was provided on informing staff about auto-enrolment, she said, but added the company's process of manually inputting payroll data into an excel file is “a bit tricky”.
“[We’re] hoping that we might be able to get some new payroll software that interacts with it directly,” said Putt. The company has 65 members of staff, with 60 members in its scheme and three employees currently too young to be enrolled.
Another two members of staff have not yet worked at the company for the three-month period required to be able to join the scheme. Just one member of staff opted out of the scheme, a month before leaving the company.
In the run-up to auto-enrolment, Putt used regular company meetings to inform employees about the new scheme, which has three contribution structures in place – depending on workers' level of seniority – and are all above the statutory minimum.
Preparing for AE
High opt-out rates have been predicted within smaller companies auto-enrolling this year. “They haven’t really engaged with auto-enrolment and haven’t really understood it; there’s quite a lot of confusion about staging dates and postponement,” said Neil Latham, principal at consultancy Punter Southall.
Some small employers believe they can put off staging, contrary to the Pensions Regulator’s guidance, said Latham.
“If we’re not careful, if we don’t plan with these people properly, then there’s a risk that this becomes 'stakeholder II',” said Latham.
However, there is a disparity of provision, and smaller companies do not necessarily have a worse set-up, said Kim Gubler, director of Kim Gubler Consulting.
There are some small companies that are sophisticated or quite used to engaging with the market, either directly with providers or through an intermediary, said Gubler.
“We expect there to be lots of different ways of skinning the cat, from those that go no further than Nest to those that want something different for any number of reasons,” Gubler said.
