Aviva has revealed that the proportion of UK businesses setting up their workplace pension after their staging date has reached a record high.
During the second quarter of 2017 (April, May & June) almost 1 in 5 (18%) employers applied to set up their workplace pension with Aviva after their staging date (the date given to them by The Pension Regulator) had passed. Those businesses put themselves at risk of a fine for not complying with auto-enrolment regulations and limit their options when choosing a workplace pension as not all providers will accept ‘late stagers’.
The rise of the ‘late-stager’
Aviva’s data shows a clear rise in the proportion of companies missing their staging date. Just over a year ago in Q1 2016, only 1% of employers wanting to set up a pension with Aviva had passed their staging date. Fast-forward to now and that figure has increased 18-fold.
At the same time, the proportion of companies sorting out their auto-enrolment obligations more than two months in advance has seen a steady decline, from a high of 40% of applicants 12 months ago to just 19% in Q2 2017. This is in some part to be expected as we approach the end of companies having to establish their pension scheme in accordance with a staging date. More recently formed, and therefore on average smaller employers, are now going through AE.
The end of the ‘late-stager’
From October this year the rules around setting up a workplace pension are changing. At the moment, existing companies are given a staging date by which time they must have a workplace pension scheme in place.
However, as announced by The Pension Regulator, any new company starting up from the autumn will have to set up its workplace pension as soon as it takes on an employee.
Andy Beswick, Managing Director of Business Solutions at Aviva, said: “Auto-enrolment has been running for five years and been a great success so far in getting more people saving for their retirement. But our data shows that as we move towards smaller businesses needing to set up auto enrolment pensions, more employers are struggling to prioritise their workplace pension.
“These companies don’t tend to be blessed with big HR departments or benefits consultants and therefore have to do it themselves, alongside the accounting, the payroll, the admin and actually growing their business and making it successful.
“If there are employers who have been putting it off, now is the time to take action. The industry has done a pretty good job of making the process as simple as possible and by going online employers can now find all the information they need and set up their pension scheme.
“Don’t put yourself at risk of a fine. Embrace the workplace pension as a tool that can actually improve your business and act as an important incentive for your employees.”