It’s never too early to start planning! The sooner your clients start, the smoother their journey will be in meeting auto enrolment obligations.
I learnt just how important good planning is when I embarked on a move from our offices in Cardiff to Kingswood last year. I felt confident that eleven months of planning would be a good foundation to smooth the anticipated pressure of moving day. Oh how wrong I was! In retrospect, I wish I'd started planning earlier.
That’s why I encourage you to get your clients to start thinking about auto enrolment as soon as possible. The pensions reform intends to encourage 7 million people to start saving as early as possible, to ensure they have enough income in retirement. For all employers out there, it's never too early to start planning for the changes they face because, like my moving day, they will not have enough time to do everything for their staging date. They will also need to adhere to the regulations from that day onwards and be able to show they're following the rules.
Here are my suggested Top 5 employer decisions:
1. Firstly, they need to understand the cost of auto enrolment and decide how they plan to meet any increased pensions costs when they become due
2. Then they’ll need to review the current pension for their employees and decide what they need to provide and how their arrangement will be structured going forward. Does your client already have a qualifying scheme? If not, encourage them to go get one!
3. They’ll need to choose a default fund suited to their employees' risk and return profile
4. A review of your client’s contribution entry levels will need to be carried out to ensure they meet the minimum requirements or more
5. They’ll need to choose and implement the right business strategy and framework. Appropriate processes and communications will also need to be in place to meet obligations. Your clients will need to:
As more regulatory detail and guidance is provided, your clients will need to keep reviewing their plan and assumptions to make any necessary changes.
Michelle Parker, Auto Enrolment Readiness Manager, Service Centres
Important noteThis article provides the views of our auto enrolment team. The views are the opinion of the person writing the article and don't necessarily represent the views of Legal & General. They are based on their interpretation of industry developments and their current understanding of UK proposed and actual legislation, and should not be interpreted as recommendations or advice.