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The Workplace Pension (Auto Enrolment)

In our view this is a massive change for employers which sadly but not surprisingly many employers have failed to grasp the significance of.

In 2016 and 2017 the vast majority of SME’s will be required to Stage for Auto Enrolment (AE) and they should receive by 31 May 2015 a letter from The Pension Regulator (TPR). This letter will inform them of their staging date, have a unique letter code and ask that the employer nominate a contact by a set date, usually within two months of the letter being issued.

This letter may come out in April 2015 and state that a staging date is 1 January 2017. We can hear employers now saying “We have loads of time to get ready” and to an extent they are right.


Commentators have described Auto Enrolment as a Tsunami about to hit employers and what they mean by this is that the vast numbers of employers due to stage in 2016 and 2017 may mean that many may leave it too late to get things in place before staging.

Let me explain. There are only so many businesses in the UK who are willing and able to assist with the set-up of AE and getting one or two employer approaches per week will not present them with any real problems. However should 100 turn up per week then they are simply not going to be able to cope with such a rush and as a consequence many employers are going to be late in staging and will be fined by TPR. The fines are a fixed penalty of £400 and then daily penalties between £50 and £10,000 depending on how many staff you have. Imagine the daily penalties last 2 months. That’s next year’s holiday cancelled then!

So what should you do first?

In our view you should get the final element of the process in place now and that is the pension plan. It takes time to get these set up and as we said earlier if you leave it too late you may be at the back of a very long queue. So if you get the pension in place now you will almost certainly be ahead of the game and you can then decide on what method you will employ to deal with the compliance aspect of AE; this may be run by yourself or you may employ an outside agent such as an accountant or a payroll bureau. Importantly, even if you have the pension available, you would not have to actually contribute to it until your staging date.

Please do not let the letter sit and gather dust on your desk, do something proactively now.

At Fyfe Moir & Associates our aim is that when the Tsunami hits our clients will be on high ground.