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PwC: thousands of employers unprepared for auto-enrolment
by William Robins on Sep 30, 2011 at 07:34
Lack of time and clarity means hundreds of thousands of employers will be unprepared for auto-enrolment next year, PriceWaterhouse Coopers (PwC) has predicted.
PwC has warned of a ‘tremendous strain’ on employers payroll and human resources (HR) capabilities when auto-enrolment reforms kick in later next year. It said employers were not prepared for the ‘enormous administrative cost burdens’ the reform will generate and the government had underestimated the impact.
Peter Woods, partner in the pensions practice at PwC, said: ‘Getting the preparations right will save damaging repercussions later, with worse case scenarios including different people’s contributions being muddled up.
‘Success will depend largely on whether payroll and other systems providers are ready in time and this is likely to be challenging, particularly given the final auto-enrolment legislation is yet to be published. For instance it’s still not 100% which employees will be excluded from the reforms.’
Woods said pension providers will not be ready for the first, and largest, employers until the late summer.
‘This leaves little time for essential configuration by individual employers,’ he said.
PwC said the government's estimate of an average £6,000 per employer for administrative costs seemed ‘far too optimistic’.
Bill Galvin (pictured), chief executive of The Pensions Regulator (TPR), announced yesterday that Capita had been appointed to manage communications between employers and the TPR.
Speaking to the Confederation of British Industry, Galvin said 600 employers would join in the first six months from October 2012. He said they were employers TPR has already been working with and who should be ready to comply.
However, he warned that while 60% of larger employers were beginning to make preparations a significant minority had not.
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5 comments so far. Why not have your say?
JHA
Sep 30, 2011 at 08:16
It is not just the employers who are unprepared. The employees also have no idea about what is about to be asked of them. A 4% contribution for many will just not be affordable and will result in forced "opt outs". As an adviser I am trying to encourage clients to consider this as a phased exercise starting right now but still get a very apathetic response. The publicity should be focussed and significant now if this is going to be anything less than a repeat of "stakeholder" pensions.
report thisAnitaki
Sep 30, 2011 at 08:22
Does anyone know if there ever was a prosecution for not displaying a "Stakeholder" certificate?. Stakeholder was a combination of farce and fiasco. Does anyone really think the Quangomeister will get the implementation of NEST right? It smacks of Stalininism, and self-employment will become the order of the day wherever and whenever possible. Employers have had enough of Government interference.
Here it says, "PwC said the government's estimate of an average £6,000 per employer for administrative costs seemed ‘far too optimistic’." Watch the unemployment figures rise, and then listen for the politicians asking "Why?"
report thisChris F
Sep 30, 2011 at 09:32
Anitaki I am sure there hasn't been one.
I am also sure that many workplaces will lapse into a culture of assumed opt-out.
report thisMr Ed
Sep 30, 2011 at 09:44
Let the great race to the bottom commence!
I am unsurprised that communication is failing on this issue. It seems somehow a part of the regulatory genetics, to be inept at explaining the issue to the common man - cue the pubic's reaction to the RDR and suddenly being faced with a fee, for what they assumed they had previously been getting for free.
No different here. The average individual won't know this is coming until their employer either asks them for the contribution; cuts their salary to meet the costs; or simply axes them - all of which will be snap judgements for many smaller firms who simply have no idea this is coming.
Well done TPR.
report thisDermot Brannigan
Sep 30, 2011 at 12:52
Anitaki, I'm sure we've all heard 'tales' of fines, but that's probably peddled by those getting paid to provide the certificate.
Where this scheme is 100% different is that they have already set up and staffed a department to 'police' employers. Presumably it will be funded by fines. You can probably work out the rest.
Its not as simple as saying 'everyone will opt-out', as the employer automatically has to opt them back in, every 3 years.
The implications for an employer are huge, and their record-keeping need to be spot-on.
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