The first employers have now auto-enrolled their relevant workers. It is very early days, but so far there have been a variety of favourable and unfavourable comments from employers and workers, and many more views are likely to emerge as more workers are auto-enrolled over the forthcoming months and years.
Auto-enrolment is designed to target low to moderate earners who are not saving sufficiently for their retirement. With this in mind auto-enrolment has been designed so that a worker's qualifying earnings will, in fact, determine whether that worker is auto-enrolled into a qualifying arrangement and whether their employer is required to pay contributions in respect of them.
All employers have a huge task ahead of them. The largest of employers which have already auto-enrolled their relevant workers will have to continue to monitor their workers to see whether they suddenly become eligible for auto-enrolment. Each worker will need to be sent the correct form of correspondence which tells them whether they will be auto-enrolled, whether they have the right to opt-in and, in the latter case, whether employer contributions need to be paid in respect of those workers.
Many employers will be seeking to take advantage of the savings available under salary sacrifice. This will need to be dealt with very carefully if being incorporated into an auto-enrolment facility. The Pensions Regulator has the power to issue substantial fines against employers who fail to comply with the requirements, and in particular, those employers who attempt to coerce workers into opting-out of the auto-enrolment arrangement.
Salary sacrifice must be communicated very carefully to such workers and it must be made very clear to them that auto-enrolment is not conditional on the worker agreeing to salary sacrifice. Otherwise the employer could face penalties for putting a barrier in place of its workers remaining enrolled in the pension arrangement. Existing and future salary sacrifice agreements will need to be reviewed to ensure they are compliant with these new requirements.
The face of pension provision is changing for the future, and its not getting any simpler!