Organisations think they are fully prepared for Auto-Enrolment, but none have been so far – 62 percent of employers who think they are prepared are in for a surprise.

We’ve found that all of the organisations we’ve spoken to would have fallen foul of the rules at some point – and clients readily admit it” UK employers wrongly believe they are prepared for auto-enrolment, but are falling far short of compliance, pension experts have warned. The warning comes as the Institute of Directors released new poll figures earlier this month which suggest that 62 percent of employers are ready for auto-enrolment. But James Biggs, Director of Corporate Pensions at Aon Employee Benefits said: “The 62 percent of employers who report that they are prepared are not likely to be ready at all – they just think they are. It is only when they actually lift the lid that they realise there is so much more involved in complying with the legislation.”

Pensions and employee benefits specialists Aon Employee Benefits – who has just had eight of their consultants pass The Pensions Management Institute’s Certificate of Auto-Enrolment, the industry gold standard for auto-enrolment expertise – has found that all of the organisations they have spoken to in the last year are not ready for auto-enrolment and are relying too much on ‘blanket pension arrangements’ as a catch-all for every staff member. One organisation in particular was considering applying the same pension contributions to every staff member, but were warned by Lorica that they would be breaking the law in terms of unlawful pension deductions if they did so without the use of fully contractual enrolments. “Lorica has helped six UK PLCs through staging so far, but we’ve found that every single one of the organisations we have spoken to generally would have fallen foul of the rules at some point and all we work with readily admit that something has emerged out of the woodwork that hadn’t occurred to them before. Many think software will sort it out, but that simply isn’t the case. Auto-enrolment needs a strategy and project management to ensure it works for the employer and employees,” said Clare Abrahams, Aon Employee Benefits’ Head of Auto-Enrolment. “Some employers are shocked to be told that it is not as easy as just applying a blanket pension arrangement across all workers. But in reality, if this isn’t implemented properly they will fall foul of other pensions legislation, for example, by illegally deducting pension contributions from those employees who are not actually eligible.”

She added: “Do people responsible for implementing auto-enrolment at an organisation really know the difference between contractual and statutory enrolment? Are they fully aware of what is involved in certifying their schemes and the specific statements they have to communicate to different employees? Are they aware of the timescales involved, how the inducement laws can impact on their practices, how to deal with opt-ins and opt-out, and what is involved with The Pensions Regulator registration? This barely touches the full extent of the legislation, but it demonstrates that very few employers – let alone many pensions professionals, actually realise just how complex the legislation is.”