The Chartered Institute of Payroll Professionals
Policy Bi-Monthly Newsletter – September 2016
Pensions
Automatic Enrolment
High compliance rates underpin success of automatic enrolment 28 July 2016
Two thirds of all employees are now active members of a pension scheme, compared with just 47% in 2012.
Automatic enrolment continues to bring more people into workplace pensions with pension saving again becoming the norm, according to The Pensions Regulator’s (TPR) Automatic Enrolment Commentary & Analysis 2016 .
TPR’s fourth annual report shows how automatic enrolment continues to help turn around the historic decline in pension provision. Two thirds of all employees are now active members of a pension scheme, compared with just 47% in 2012. Compliance rates amongst the first group of small and micro employers to undergo automatic enrolment are above 95% - demonstrating the effectiveness of TPR’s communications to employers including ‘nudge’ letters and emails, awareness-raising with trade associations and business networks, and a national advertising campaign in partnership with the Department for Work and Pensions.
The majority of employers left to stage (57%) will be micro employers (employing 1-4 people), and of this sub-total, just over a third (34%) will employ just one person.
A redesigned website, emails and letters were part of a package of communications designed to make it as easy as possible for these employers to comply with the law.
In the report, TPR also updates its forecast of the numbers of employers due to stage in the next two years. There is little change in the number of employers forecast to have workers that they will need to place into a pension scheme. This remains up to 950,000. However, the overall number of employers expected to have duties has been revised down to between 1.32m and 1.46m. This includes employers who will not need to put workers into a pension scheme but will still have other duties, such as declaring compliance, or providing workers with information.
The revision is largely as a result of TPR identifying a large number of single person directors (SPDs) in the summer 2017 stages. The duties do not apply to SPDs, although this may change if they take on other workers.
TPR identified these employers after obtaining access to real-time information (RTI) data from HMRC, and also as a result of direct feedback from employers written to about AE. TPR intends to publish an updated forecast annually.
Other key points from the report include:
The number of employers using DC schemes for AE has risen from 86% to 93%. Of those who chose to put their staff into a DC trust scheme, 98% chose a master trust, up from 94% the previous year. Around half of workers who have been put into a pension have been automatically enrolled into a master trust. (3 million). 97% of workers put into a master trust are in one with master trust assurance. There continue to be high levels of awareness among small (95%) and micro (79%) employers due to stage in 2016 and 2017. This increases the closer they are to staging. From 16 October to 31 March 2016 185,107 employers used the new Duties Checker tool on TPR’s website. As of March 31, 13,484 of those who completed the declaration brought forward their automatic enrolment duties.
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