Regulator to write to large employers
The Pensions Regulator has announced that within the next 6 months, it will write to almost 600 of UK's largest companies and organisations marking 18 months to the date from which the auto-enrolment duties will apply to them and alerting them to what those duties are.
New regulator guidance
The Pensions Regulator has also issued nine sets of guidance notes for large employers on matters such as:
- the first steps that employers should be taking to prepare for their auto-enrolment duties; and
- how employers can bring forward the date on which they are required to comply with the regime.
Hardship policy for employers
The Regulator has also stated that it will run a form of hardship policy for employers who cannot afford to comply with their employer duties. Details of that policy have not yet been revealed, but we consider it is likely to apply in exceptional circumstances only and with the aim of helping employers overcome obstacles to complying.
With the Pensions Regulator stepping up measures to encourage employers to start considering their auto-enrolment duties, it is time for large employers (those with 120,00 or more employees, who have to comply with the regime from 1 October 2012) and trustees of their schemes to start to take practical steps. Employers will need to consider key issues, such as
- Whether they intend to use NEST for some or all of their employees.
- If they intend to automatically enrol employees into their existing pension schemes, whether those schemes meet the auto-enrolment scheme conditions. If they do not, employers will need to consider changes to ensure that they do comply.
- The cost implications of the above and any knock-on effects on employees' overall benefits package.
Trustees of schemes will need to consider the implications of the employer's decisions on their schemes, especially where rule changes may be required.
October 2012 may be a while away yet. However, with so much for employers and trustees to do, it would be wise to put a timetable in place for the various steps that need to be taken to comply.