As we steadily emerge from a tumultuous 18 months caused by the pandemic, we are now taking stock of our new normal and the challenges ahead.
We, like all organisations, continue to contend with the ever-present uncertainty. However, we remain focused on ensuring savers are at the heart of all we do.
We want to ensure that automatic enrolment (AE) remains a success. Since it started in 2012, AE has transformed retirement savings. More than ten million people are now saving for the first time and have a fantastic opportunity to save for the retirement they want.
While we have all grappled with the immediate and evolving change over the past year and half, it’s crucial we do not lose sight of the hard-won success of AE so that all savers remain protected now and in the future.
Same storm, different boats
It has been said of the pandemic that while we are all in the same storm, we are all in different boats. And this is no less true for businesses. We recognise that businesses have been impacted in a myriad of different ways and face unique challenges.
Many businesses will be changing how they operate in response to the pandemic. This could be to meet changing customer demand or in response to cashflow challenges. This could mean firms having to downsize if demand has fallen, expand or reallocate resources and staff if some parts of the business have seen increased demand.
Whatever the situation a business finds itself in, our message to employers is simple: Do not neglect your workplace pensions duties as you adjust to the new normal.
Employers must continue to assess staff, carry out re-enrolment duties and put new staff into a pension. We also urge start-up businesses now opening their doors to make sure they enrol eligible staff into a pension and complete their declaration of compliance on time.
We know some sectors are at greater risk of non-compliance than others. Most often, these are businesses that historically employ part-time or seasonal staff with fluctuating earnings. These include food and accommodation, farming and wholesale and retail businesses. We are now looking at the unique challenges within these sectors so that we can best support them and ensure they have access to the information they need to avoid non-compliance.
We are also keeping a close eye on the ‘gig economy’ which is set to grow further as the UK emerges from the pandemic and businesses recover.
Earlier this year we welcomed the news that following a Supreme court hearing, Uber would be automatically enrolling their staff into a workplace pension. We are calling on all employers in this sector to step up and do the right thing for their staff. Anyone who employs staff should assess them to check if they’re eligible for automatic enrolment and ensure they receive the pensions they are entitled to. We want to see all employers in the gig economy comply with their responsibilities voluntarily and promptly. We treat all employers the same and we will take enforcement action where appropriate to ensure all savers are protected – no matter what sector they work in.
More challenges ahead
We are fast approaching the end of September when the government’s COVID-19 support for businesses comes to an end. This support has been crucial in keeping thousands of businesses afloat but as it finally winds down, employers must be prepared.
We have been consistently clear since the start of the pandemic that while the workplace has changed, workplace pensions duties have not. Automatic enrolment duties remain the same and must be fulfilled alongside all the other requirements for running a business. We want to support businesses, not fine them but we will take enforcement action where needed to ensure staff receive the pensions they are due.
Struggling employers should not put their head in the sand and wait for a fine. In the first instance, they should speak to their pension provider – many may work with employers to set up a payment plan so that staff receive the correct contributions.
Inevitably and sadly, for some businesses the consequences of the pandemic will be too great, leading them to become insolvent. In these instances, our focus will be to work with insolvency practitioners and the Insolvency and Redundancy Payment Services so that staff do not miss out on their pensions.
Throughout the pandemic, we have closely monitored employer behaviour and despite the constantly changing environment, compliance with the law has remained high. Employers have continued to do the right thing for their staff and have continued to make pensions contributions.
What is also clear is that despite financial pressures faced by individuals, staff have continued to save for their future retirement and opt-out levels have remained low. Workers continue to expect a pension as part and parcel of their jobs.
Indications are also that often, when staff who originally opted out of their pension are re-enrolled by their employer, they take advantage of the fresh opportunity to start saving. Re-enrolment must be carried out by employers every three years and it’s important they check their processes are up to date to ensure staff are re-assessed and put into a pension if they are eligible.
We have all overcome great obstacles since March 2020 and there will be yet more testing times to come. While we can expect more change and more upheaval, our commitment to workplace savers remains constant. We will continue to support employers to do the right thing so that staff receive the pensions they are due.
By Mel Charles
Director of Automatic Enrolment