Financial adviser Lighthouse Group warned that employers cannot always rely on their existing payroll provider to implement the processes, and that choosing suppliers and structures can take longer than expected.
Risks
CEO Malcolm Streatfield explained: “The reality is that deferment carries its own risks: businesses have to decide which supplier they will use and the structure they will adhere to, while undertaking the mandatory requirement of notifying their employees with all the necessary information.
“Many employers will want the relative luxury of speaking to an adviser face-to-face for such a big decision.”
The Pensions Regulator recently told hospitality businesses that they should be aware of their staging date and not wait until the last minute to enrol staff, but Streatfield believes operators are not yet taking the recommendation seriously.
“Despite this advice by the industry regulator, our intelligence is showing that many businesses are not leaving themselves enough time to prepare, even though they are aware of their auto-enrolment timelines.
“A common mistake by employers is the assumption that their existing accountants or payroll provider will provide the necessary advice or support and a ready-made solution, which only serves to lull employers into a false sense of security,” he added.
Unexpected issues
Lighthouse Group saw a surge of auto-enrolment in July and August, and predicts further surges through to November, leaving the companies deferring the process to face queues for advice.
The company said even larger employers with the necessary resources have faced issues with the auto-enrolment process; for example payroll systems unable to deal with the demand within the allotted time, or the proliferation of ‘dirty data’ challenges.
This has caused some employers to change suppliers half-way through the process, even after they finished the enrolling.
Streatfield explained: “Many have simply not factored in the length of time it takes to gather the correct personal data of employees and get their payroll systems into shape, which is a mandatory requirement to begin the process.
“My advice for them is to engage early. Starting early will mitigate the risks of making mistakes and then getting fined as a result, while also helping with the budgeting process and avoiding any market capacity problems. Too many businesses have left the process too late and risk making costly mistakes, by utilising the wrong solution.”
Staging date
Over 32,000 SMEs with 50 to 249 employees are due to enrol in workplace pensions in this financial year, and 1.6m SMEs representing 9.3m employees, will have to enrol into pension schemes over the next four years.
Among them, 558,000 SMEs with fewer than 50 employees will have to be ready for their staging dates from early next year through to 2016, with over 660,000 micro-employers following in 2017.
Check out BigHospitality's checklist for pension auto-enrolment.