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AUTO-ENROLMENT CATASTROPHE LOOMS

In our September newsletter we discussed the important changes to the pension system which will impact on employers. You can read our previous detailed article at the follow link.

http://www.friendandgrant.co.uk/pension-revolution-starts-1-october-2012

Basically employers will have to set up pension schemes and contribute to the scheme for employees. The employee has the option to opt out but given that the employer will in due course have to contribute up to 3% of earnings many employees will probably wish to stay in the scheme.

FACT- Auto enrolment for employers is coming and will impact on every employer.

The worry however is that a scheme will have to be set up and demand for help is now increasing.

Demand to fulfil auto-enrolment requirements will outstrip supply by May, according to AWD Chase de Vere. The independent financial advisers have warned that traditional product providers can only support the establishment of about 2,100 new pension schemes a month. However, this figure will be exceeded in May and at the peak of the reforms 80 times this capacity will be required.

 Jon Dixon, Corporate Advice Manager at the firm, said: “We strongly encourage employers to start planning for auto-enrolment now rather than waiting for their official staging date. This will help them to avoid the consequences of a potentially failed and frozen market.”

We strongly recommend that if clients do not have pension schemes in place for their staff that they at least start exploring the options with their financial advisers. If you do not have a financial adviser please contact either Andrew Grant or Mark Friend and we will be delighted to recommend a suitable adviser.