With the one-year anniversary of automatic enrolment imminent, NEST has today launched the top five “dos and don’ts” for employers, based on its insights into the challenges faced by employers who have implemented automatic enrolment so far.

Tim Jones, CEO of NEST, says: ‘Automatic enrolment has brought a radical change to workplace pensions, but it will rapidly become the new normal. Whilst the early stages have primarily affected large employers, the numbers of employers coming under the duties increase dramatically in the next few months. We all have to up the pace to be prepared for much higher volumes and to meet the challenges implementing automatic enrolment brings.

‘NEST is already working with over 1,000 employers for automatic enrolment. Our insights into their experiences have enabled us to develop some really useful dos and don’ts for employers still to go through the automatic enrolment experience.’

Employer dos (more details below):
Plan early, don’t underestimate how long it will take, talk to your payroll and other providers as soon as possible. Assess your workforce to understand which of your workers are affected. Communicate with staff clearly and early; engage and involve. Have a communication plan and involve all relevant departments in your business.

Examine systems (particularly payroll) to ensure they are ready and capable.
You may want help – you may want guidance from experts/external advisors.

Plan
NEST experience indicates that just over half (53 percent) of employers have spent more than 10 months preparing for the reforms with almost a quarter (24 percent) taking more than 16 months. Conflictingly, research from NEST shows that there are a number of triggers that galvanise employers into starting their automatic enrolment planning, namely: When they are back from summer holidays; It’s after their year-end (when they’re busy); They’ve completed another project (for example RTI), 1st January (start of calendar year)

‘Employers aren’t always leaving themselves enough room to implement automatic enrolment and may be placing unnecessary pressure on their business to meet their duties in time. Employers can register with NEST to receive countdown emails; these email reminders can help employers stay ahead of the game,’ says Tim Jones. Over the last year NEST has seen indications that employers are assuming their incumbent provider will be able to meet their automatic enrolment requirements; this is not always the case. By starting conversations early, employers can ascertain whether they can use their existing provider or whether they need to start looking elsewhere.

Assess
There are 3 types of workers, eligible, entitled and non-eligible. By carrying out a worker assessment you can identify which category each of your workers belong to and your responsibility to them. This will make your job much easier when you need to automatically enrol your workforce.

Communicate
Communicate with staff clearly and early, have a communication plan and involve all relevant departments in your business. By using effective communication at the start, you can save time-consuming questions later.

Charles Cotton, Rewards Adviser, the Chartered Institute of Personnel and Development (CIPD) comments: ‘Getting the communication right from the outset will help make the running of automatic enrolment much smoother. Our members have found that communications have greatly reduced the number of questions they receive from workers. What’s more, workers who hear about their new pension from their employer are much more likely to value this as part of their reward package.’

Examine systems
Assess systems (particularly payroll) to ensure they are ready and capable for your automatic enrolment needs.

Karen Thomson, the Chartered Institute of Payroll Professionals (CIPP) comments: 'Automatic enrolment has required investment in payroll processes and systems, whether in-house or outsourced. The payroll function is best placed to examine the age and earnings of a workforce and determine the number of workers to be automatically enrolled. In addition, payroll can establish the date that workers become 'eligible' for contributions, calculating those contributions and managing refunds to workers who've opted out’.

You may want to get help
Get advice if you need it. You may want guidance from experts and external advisors. NEST has carried out extensive research with employers and advisers to understand what this new market wants from a pension scheme, and we’ve incorporated these features into the design of NEST. What they are looking for is something that takes away the headaches of running a scheme: a scheme that is easy to set up and administer day to day; has low charges; with a sophisticated and suitable investment approach; and clear and straightforward communications for members and employers.

NEST also has a number of tools on its website for employers and advisers to use. Laurence Baxter, Head of Policy & Research at the Chartered Insurance Institute (CII) comments: ‘Employers are not pension experts. Advisers can step into this space – many have developed professional expertise in the area of workplace pension schemes, assessing the products and support for employers. Particularly Chartered financial planners are ideally placed to assist an employer to choose the right scheme for them. They may also provide services to employers on an on-going basis to help with the admin of automatic enrolment.’

Employer don’ts:
As well as sharing the experience on what to do, NEST employers have highlighted what you shouldn’t do. Staged employers warn: ‘Don’t fall for these misconceptions…’
1. ‘Once we’ve chosen the pension provider everything will be done for us’
2. ‘There’ll be a lot of work leading up to the deadline but then our work is done’
3. ‘We have to offer a pension to all staff’
4. ‘It’s like the stakeholder pensions. Most people will opt out’
5. ‘Our payroll provider will tell us what we need to do with regards payroll’

‘Once we’ve chosen the pension provider everything will be done for us’
Pension providers aren’t going to be able to do everything. Employers tell us that the main challenges they face are understanding how the regulations apply to them, assessing which workers are eligible and communicating the changes to their workers. Not all providers are ready you help you with these. Providers can make it easier though; at NEST, for example, we’ve put together a range of guides and tools to help employers understand what they’ll need to do to get ready. ‘There’ll be a lot of work leading up to the deadline but then our work is done’ Automatic enrolment isn’t just a one-time event. Once you’re up and running you’ll still have to calculate and pay regular contributions and keep assessing your workforce for anyone that needs to be automatically enrolled every pay period.

‘We have to offer a pension to all staff’
Automatic enrolment doesn’t apply to everyone. Employers need to automatically enrol all workers who: work or usually work in the UK; aren’t already a member of a workplace pension scheme; are aged at least 22 but under State Pension age; earn more than £9,440 – this figure applies to the 2013/14 tax year, and is reviewed each year by the government. These people are known as ‘eligible jobholders’ and their employers will also have to make a minimum contribution into the pension scheme on their behalf. ‘It’s like the stakeholder pensions. Most people will opt out’ ‘At the beginning of automatic enrolment the industry assumed an opt-out rate of around 35 percent, experience so far is that they are much lower – typically lower than ten percent. This is a great success story for workers, with more workers saving for their retirement than anticipated’.

‘Our payroll software or service provider will tell us what we need to do with regards payroll’
‘Your payroll software might not be able to do everything for you. It might assess the eligibility of your workforce but it won’t be able to tell you what your pension rules are, in fact you must tell it what the rules are. The only way you will know what your payroll service provider will do is by asking them – don’t just assume! They might run the payroll processes but they might not carry out all the work necessary for you to meet your automatic enrolment obligations.’ Karen Thomson, CIPP.

How To Effectively Manage Staff During The Corporate Restructuring Process
Although there has been much trumpeting by the Government about the signs of economic recovery, it’s pretty obvious to many people that a couple of quarters of (far-below predicted) growth isn’t anything much to get excited about. It can be spun every which way but however you look at it the business landscape is as tough now as it was four or five years ago when the big crash was in full swing. A lot of companies are struggling to keep afloat, never mind grow, and a lot are having to undertake corporate restructuring to stay in business.

Nobody likes restructuring, especially the inevitable layoffs, but if it’s undertaken early it can be extremely effective at turning a business around. One of the areas that will take the biggest hit is staff morale and, by knock-on effect, productivity. That’s the last thing you need. In a time where you need staff to be pulling together, a demotivated workforce will be hunting for other jobs. Here are some tips to help you manage staff morale during the corporate restructuring process.

Communication Is Key. You can try and keep it all as quiet as you like, but the fact of the matter is that employees will notice that trouble is afoot. To keep the rumours to a minimum make sure that you keep up regular and clear communications with everyone. If you keep employees in the dark they will draw their own conclusions and then be more likely to down tools or jump ship entirely. Have meetings, where possible answer questions clearly and let them know that you are taking positive action.

Make A Clean Break. A lot of businesses decide the best way to carry out redundancies is in rounds. Take a department a week until everything is done. This is really bad for staff morale as it gives people time to worry if they will be next, and also to think about the fate of their co-workers. It’s best to tackle everything in one go, and if necessary have departmental heads carry out the process to make the changes quick, clean and efficient.

Be Compassionate. If you can you need to offer a fair redundancy package. The advantage here is twofold. Primarily you’re helping out the unfortunate employees who are being let go. What’s happening is out of their control, this isn’t being sacked for poor performance or negligence. The added benefit of providing a redundancy package is that people who are not laid off will feel more comfortable continuing to work for your company. Not only will they be glad that their former co-workers aren’t being tossed onto the scrap heap, they’ll also be less likely to worry about any possible future layoffs. This will keep maintain a positive attitude moving forward.

Corporate restructuring is a hard business, and unfortunately it means that there will be some collateral damage during the process. To limit the effects it’s important to manage the process effectively. These tips will help but seeking advice from the professionals can make the entire process smoother, ensuring your business has the best chance of success.