How are your New Year’s resolutions working out? There are a multitude of things you could focus your energy on that could help your business; embracing social media, refreshing your store or website, getting your tax return in order… or you could focus on getting ready for the biggest change to workplace pensions, ever.
As the pension technical manager at NEST, you can guess what I think you should do. Workplace pension reforms by the government – called ‘automatic enrolment’ are coming and it could be a more complex job than most employers think.
Automatic enrolment launched on 1 October 2012 and affected the largest employers in the UK first. NEST is currently working with over 840,000 members and 2,500 large employers, including many household name employers such as BT, McDonalds and Travelodge. But the hard work is only just beginning. Over the next five years more than 1.2 million employers will enrol up to 11 million workers into a pension scheme, many with limited experiences of pensions. Only the very largest employers in the UK were affected in the first stages, but that is about to change. 2014 sees smaller businesses start to meet these new legal duties. The question is: do you know when your business will be affected, and are you getting ready?
The employers that have automatically enrolled their workers so far had experience of workplace pensions but still found it difficult and time consuming. Research has found that many had taken longer to prepare than they originally planned. NEST research found that 20 per cent had taken over 16 months to get ready. On top of that 66 per cent found it more difficult than anticipated.
Around a third of employers who have to enrol workers in 2014 are likely to either not offer any pension scheme at all or just have a shell stakeholder scheme in place, so experience of delivering workplace pensions is much lower. This is compounded by the fact that only around half (52 per cent) of employers staging in 2014 said that they had a good understanding of pensions compared with 96 per cent of earlier stagers.
Employers with less experience of pensions need to give themselves plenty of time to get it right, and there’s likely to be more involved that you think. For example, you’ll have to assess your workers to see who’s eligible and make sure your payroll systems are ready for the changes – so it’s not just about putting a pension in place. Whilst it may not take smaller businesses 16 months to implement the changes, you should allow between six and 12 months in your plans.
To understand what you need to do, you first need to understand the new rules for workplace pensions. Many employers we’ve talked haven’t looked at the requirements in detail yet, which could mean they are running out of time to get things organised.
Here comes the resolution – relieve stress and worry by starting now!
A great place to start is to visit the Pension Regulators website and finding out when you have to meet your duties (known as your staging date). You can also use the free tools and guides on the NEST website to help you plan for and implement your duties and sign up to the NEST countdown emails that help you understand what you need to do and when. Being prepared will mean that you can meet your duties in time and save yourself stress.
Now I know that New Year’s resolutions are typically made in January and the yuletide optimism has well and truly passed, but why don’t you give it a go? Make February the month that you make a (sort of) New Year’s resolution for your business. Although, as most small business owners will know, stress for your business means stress for you. So maybe your business New Year resolution is actually for you too.
