Pension auto-enrolment started in stages in 2012. The Government introduced it for a number of reasons but mainly because of concerns that, with an ageing population, there won’t be enough in the state pension pot to go around in the not too distant future. In fact, there is no state ‘pension pot’, pensions are paid from the contributions that we make as we are working today.
Employers have a number of responsibilities in relation to auto-enrolment, but recent figures issued by the Pensions Regulator suggest that a growing number of them don’t know or fully understand what they are.
Under the current legislation, employers have a duty to undertake the following:
Keeping records of auto-enrolment;
Monitor the ages and salaries of existing staff and new hires at each pay date in order to determine their eligibility to join the scheme;
Enrolling eligible staff and informing them when they are eligible to join;
Managing requests to leave or join the scheme as the employee wishes;
Paying contributions into the pension scheme.
This is more complex than you might think with the fluidity of the current workforce, more people working on fixed-term contracts and so forth. And employers need to ensure that they do it for everyone.
Of course, many employers offer enhanced pension schemes, in which employees make greater contributions for a better pension at retirement and employers have separate responsibilities in relation to these.
A question that comes up a great deal in HR circles at the moment is: should employers be doing more in relation to educating employees with regard to their finances? Employers can’t offer advice, that is the realm of licensed financial advisors, but they can arrange for employees to receive financial education.
There are a number of benefits to providing this type of education or awareness. Many employees, at every stage of their careers, ask for this kind of education. Even some senior executives don’t have their financial planning under control and it is never too late to start. Providing appropriate education can help to improve employee engagement as well as addressing potential financial worries that may be affecting the work of some staff members. Financial education is now generally regarded as a useful benefit.
Financial advisors will ask for the demographics of your organisation before delivering this education and although people want different things at different stages of their lives, this is something that you can discuss with your team.
The important thing is that you tailor the education to the needs of your workforce and that you enable them to arrange one-to-one interviews with the advisor at a later stage, if that is what they want. Financial advisors often provide an initial, one-to-one session for free, while they are finding out about an individual’s situation, but there are fees involved in any products supplied. They will detail to the customer how these fees are charged. If you don’t know any financial advisors and none have been recommended to you, the independent Money Advice Service can help .
Even as recently as twenty years ago, management teams didn’t think their employees would need help with financial education. Lives were perhaps more stable then, but the speed of innovation today is bringing with it new challenges and opportunities. Let’s face it, most leadership teams need some help to ensure that they have the best people in pivotal positions and that they are giving them the right benefits. If resourcing is keeping you awake at night, why not contact Clifford Associates’ industry-leading team for help?
Central London (WFH), to £300 p/d. Initial contract 3mth expected to roll.
Central London (WFH), £300 p/d. Initial 3-6mth contract. Expected to roll.
Central London (WFH), £70k
Central London (WFH), £80k + Bens
Central London (WFH), to £35k + Excellent Bens. (Freelance £250 p/d).
Central London, £45k + Excellent Bens - 6 mth FTC (expected to roll to Perm)