DCSIMG

Scottish companies slow to get to grips with pension auto-enrolment

  • by MARTIN FLANAGAN
 

SCOTTISH businesses are risking heavy fines by failing to move fast enough on pension auto-enrolment, a leading pensions consultancy has warned.

More than one in three major employers canvassed say they are undecided which pensions vehicle – existing company schemes or new ones – they will use to comply with coming auto-enrolment responsibilities, says JLT Benefit Solutions. Many blame cost implications and ignorance of the scheme’s complexity.

JLT, which took over Scottish benefits consultancy Alexander Forbes last year, recently surveyed 250 UK firms – about 12 per cent of them in Scotland – with between 500 and 3000-plus staff.

John Wilson, head of technical at JLT, said all employers with more than 250 employees had to have their auto-enrolment schemes operational by February 2014, with some ­having deadlines as early as November.

But he said it seemed that many companies were dangerously behind schedule and risking leaving it too late to comply with their obligations.

Wilson said: “A significant proportion of firms came back to us in the survey and said they did not know what pension schemes they were going to use.

“By contrast, we start talking to the companies we advise on AE 18 months before they go ‘live’. It is a surprise and a real concern.”

Malcolm Paul, chairman of JLT Benefit Solutions Scotland, said many businesses were unaware that AE was a “multi-discipline task” involving several departments, ­including finance, IT and ­personnel.

“They are not deliberately burying their heads in the sand. They just don’t know how much work and process is involved after choosing their pension vehicle.” Paul said.

He cited the complexity that under the legislation governing AE new staff could opt out, but they had to be re-enrolled every three years.

“That means for bigger companies you have to have automated monitoring of the age and entitlements of all workers at all times,” he said. “For that you are building up IT infrastructures to pick up on people, and that can take a long time.

“Some firms just think the payroll department will sort it all out, but they will not.”

Paul said resolving differing interdepartmental views on AE implementation also took time, with finance “focused on the bottom line” and human resources “more concerned about consistency of treatment for staff”.

JLT said another problem was that there was a crackdown on spending at businesses in a prolonged downturn, and so AE was not considered a top priority.

Wilson claimed this was shortsighted, however. “The pensions regulators that will police auto-enrolments have powers to issue notices to companies to tell them to get their skates on.

“And if that does not work there is the provision for fines of tens of thousands of pounds,” he added.

 

Comments

 
 

Back to the top of the page

 

X scottish independence image

Keep up-to-date with all the latest Referendum news