Like all organisations, we have contended with the ongoing change and uncertainty caused by the pandemic.
However, we have remained focused on ensuring that savers are at the heart of all we do.
Since it started in 2012, automatic enrolment (AE) has transformed retirement savings. More than ten million people are now saving for the first time and have a fantastic opportunity to save for the retirement they want.
It’s crucial we do not lose sight of the hard-won success of AE so that all savers remain protected now and in the future.
It has been said of the pandemic that while we are all in the same storm, we are all in different boats. And this is no less true for businesses.
We recognise that businesses have been impacted in a myriad of different ways and face unique challenges. Many businesses will be changing how they operate in response to the pandemic. This could be to meet changing customer demand or in response to cashflow challenges. This could mean firms having to downsize if demand has fallen, or expanding or reallocating resources and staff if some parts of the business have seen increased demand.
However, whatever the situation a business finds itself in, our message to employers is clear: do not neglect your workplace pensions duties as you adjust to the new normal.
Automatic enrolment has transformed the way we save and has led to more than ten million people saving for the first time. It’s crucial this success continues so that all savers are protected now and in the future.
Employers must continue to assess staff, carry out re-enrolment duties and put new staff into a pension. We also urge start-up businesses now opening their doors to make sure they enrol eligible staff into a pension and complete their declaration of compliance on time.
We know some sectors are at greater risk of non-compliance than others. Most often, these are businesses that historically employ part-time or seasonal staff with fluctuating earnings. These include food and accommodation, farming, and wholesale and retail businesses.
We are now looking at the unique challenges within these sectors so that we can best support them and ensure they have access to the information they need to avoid non-compliance. We are also keeping a close eye on the ‘gig economy’ which is set to grow further as the UK emerges from the pandemic and businesses recover.
Earlier this year we welcomed the news that following a Supreme Court hearing, Uber would be automatically enrolling their staff into a workplace pension. We are calling on all employers in this sector to step up and do the right thing for their staff. We want to see all employers in the gig economy comply with their responsibilities voluntarily and promptly. We treat all employers the same and we will take enforcement action where appropriate to ensure all savers are protected, no matter what sector they work in.
The workplace has changed; workplace pensions duties have not.
We have been consistently clear since the start of the pandemic that while the workplace has changed, workplace pensions duties have not. Automatic enrolment duties remain the same and must be fulfilled alongside all the other requirements for running a business. We want to support businesses, not fine them, but we will take enforcement action where needed to ensure staff receive the pensions they are due.
Struggling employers should not put their head in the sand and wait for a fine. In the first instance, they should speak to their pension provider; many may work with employers to set up a payment plan so that staff receive the correct contributions.
Inevitably, and sadly, for some businesses the consequences of the pandemic will be too great, leading them to become insolvent. In these instances, our focus will be to work with insolvency practitioners, and the Insolvency and Redundancy Payment Services, so that staff do not miss out on their pensions.
Throughout the pandemic, we have closely monitored employer behaviour and despite the constantly changing environment, compliance with the law has remained high. Employers have continued to do the right thing for their staff and have continued to make pensions contributions.
Staff expect a pension
What is also clear is that despite financial pressures faced by individuals, staff have continued to save for their future retirement and opt-out levels have remained low. Workers continue to expect a pension as part and parcel of their jobs.
Indications are also that often, when staff who originally opted out of their pension are re-enrolled by their employer, they take advantage of the fresh opportunity to start saving. Re-enrolment must be carried out by employers every three years, and it’s important they check their processes are up to date to ensure staff are re-assessed and put into a pension if they are eligible.
We have all overcome great obstacles since March 2020, and there will be yet more testing times to come. While we can expect more change and more upheaval, our commitment to workplace savers remains constant. We will continue to support employers to do the right thing so that staff receive the pensions they are due.
This article was featured in Pensions Aspects magazine October edition.
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