Should employers be concerned about Auto Enrolment capacity crunch?
Pension providers across the UK have been warning employers, financial advisers, employee consultants and pretty much anyone who will listen about the oncoming ‘capacity crunch’ regarding Auto Enrolment. The question is should we be concerned? In short, Yes.
The only provider on the market that has a legal responsibility to take all employers is NEST. Every other provider on the market will pick and choose their clients just like any other business. The problem lies in the number of businesses these few providers will have to choose from, every business in the UK and Northern Ireland!
Back in July Scottish Life started warning that they would only accept employers that started to plan with at least 6 months to run until their staging date and more recently the have warned that they may exit the market in 2015 or sooner if they feel the business is not profitable. This poses a problem for small to medium sized employers (SMEs) in that the ABI (Association of British Insurers) only lists a total of 10 member providers in the Auto Enrolment market. There are a few other non ABI member providers out there but this does not answer the problem that the number of companies to be auto enrolled per month could potentially far outstrip the supply.
The best thing any employer can do is get prepared early with good quality independent advice to have the best chance of providing a company pension scheme that works both for them as an employer and for their employees.
Images courtesy of J.Reed on Flickr