15th January 2015

Royal London: A look back over auto enrolment in 2014

A look back over auto enrolment in 2014

A festive round-up of what happened during the last year in the world of workplace pensions.

Rockin' around the DWP

This year has been an especially important one when it comes to auto enrolment. With over 5 million people automatically enrolled so far¹, it all seems to be going relatively well.

But with around 50,000 employers due to stage next year, and another 500,000 or so in 2016², the DWP was a bit worried that millions of people will be automatically enrolled into poor value pension schemes. So throughout 2014, they published numerous consultations that tried to make sure auto enrolment schemes provided value for money.

The commission ban, charge cap and other changes are all due to come into force from April 2015, just as smaller employers reach their staging dates.

Some providers have been scrambling to re-price schemes, turning off commissions earlier than the deadlines and working out how they can continue to offer schemes within the new cap.

As well as that, there's a consultation going on just now that aims to change some of the auto enrolment regulations to make it all a bit easier for smaller employers.³

Auto enrolment related documents published by the DWP in 2014⁴

We Three Fines of (the) TPR

The Pensions Regulator used its considerable powers to enforce auto enrolment compliance in various ways during 2014.

• In April, they named and shamed Dunelm Soft Furnishings for compliance breaches and issued an unpaid contribution notice to the tune of £83,000.⁵
• And in its quarterly compliance bulletin published in October 2014, the Regulator confirmed that it had for the first time fined three employers £400 each for non-compliance.⁶
• Finally, in its year end declaration of compliance bulletin, the Regulator confirmed almost 43,000 employers have completed their declaration of compliance so far.⁷

Selected powers used by The Pensions Regulator to September 2014⁸

Do you CDC what I CDC?

This year hasn't just been about auto enrolment however.

In June, the DWP published its consultation response on Defined Ambition and Collective Defined Contributions (CDC) schemes.⁹ The end result is that we now have a new framework for risk-sharing pension schemes, although they don't seem very popular at the moment.

Have yourself some free impartial guidance

Over in adviser land, we are starting to see more and more advisers asking for auto enrolment help for their own clients now approaching their staging date.

The auto enrolment advice market seems to be separating into two distinct groups:

• those who just want to look after their existing clients, and
• those who have the resources and processes to offer auto enrolment solutions to the hundreds of thousands of employers due to stage over the next few years.

There will remain a substantial gap in employer auto enrolment advice but we needn't worry about workers from April next year as they will of course have access to free impartial guidance.

And so, as 2014 draws to a close, it seems that what we've mainly been doing in the workplace pensions market has been frantically preparing for the tsunami of employers staging over the next few years while being mildly distracted by employers actually staging during 2014.

One thing's for sure, 2015 is going to be busy.

Sources:

1 & 7– The Pensions Regulator, Declaration of compliance report, December 2014
2 - The Pensions Regulator, Employer staging forecast, January 2014
3 – DWP, Technical Changes to auto enrolment, Consultation on draft regulations, December 2014
4 –DWP, dwp.gov.uk publications 2014 “Pensions and an ageing society”
5 – The Pensions Regulator, Report under s89 of the Pensions Act 2004, April 2014
6 & 8 – The Pensions Regulator, auto enrolment Compliance and enforcement, Quarterly bulletin 1 July – 30 September 2014
9 – DWP, Reshaping workplace pensions for future generations, June 2014

Author – Jamie Clark

Auto-Enrolment, Pensions