Articles - Auto-enrolment uncertainty is hampering compliance

Continued uncertainty on auto-enrolment duties is hampering companies’ efforts to comply

 Continued uncertainty over employers’ duties under the new auto-enrolment regime is hampering their efforts to ensure compliance, according to Mercer. The Government has recently announced that it will reconsider the cap on contributions and ban on transfers to NEST, and although Mercer welcomes the ongoing scrutiny of the new regime it urges the Government to speed up this review so companies can quickly and accurately assess their options and make informed decisions.
 Gail Philippart, a Principal in Mercer’s DC consulting team, said: “The continuing uncertainty around employers’ duties under auto-enrolment is a barrier to organisations that are trying to make plans. Ongoing scrutiny of the auto-enrolment regime is important to ensure the Government’s goals are achieved. However, the continual moving of goalposts is not helpful, but rather a drain on time and resource for the many forward-looking companies trying to ensure their own compliance.”
 Commenting on the current cap on contributions and ban on transfers to NEST, Ms Philippart said: “With new auto-enrolment providers coming on line, in direct competition with NEST, it seems unfair that NEST is still subject to such restrictions. This means that in many cases they can not compete directly with the other low cost providers.”
 In a separate comment the Pensions Minister also indicated that the consultation on short service refunds is unlikely to come up with a firm answer on what the future framework will look like. According to Mercer, the continuing uncertainty is, once again, causing a planning vacuum for some organisations. Ms Philippart commented: “Many scheme sponsors want to retain their trust-based schemes which they believe give them the opportunity for a much more hands on approach to looking after their employees’ pensions. However, without knowing whether they will be stuck with hundreds or thousands of small pots to administer means some sponsors are considering a move to different types of schemes.
 “For many organisations, complying with the new auto-enrolment rules is already proving an onerous task. Once again this additional uncertainty is hampering forward planning.”
 Ms Phillipart added: “Whilst many organisations with staging dates this year are well advanced in their planning, medium sized organisations, due to stage next year, are now starting their planning in earnest and are realising these issues could affect their future plans."

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