Employers staging in 2014 have three fundamental gaps – in experience, knowledge and reality – according to research published by Nest today.
Nest says that unlike 2013 stagers, second year employers are not engaging enough with the detail of the reforms in order to successfully manage their duties.
The report found that first year employers staged successfully thanks to their pensions experience and knowledge and by dedicating enough time to the project, although many reported that implementing the duties took longer than expected. The research found that 20 per cent of first year employers had taken over 16 months to get ready, despite previously offering a pension scheme to at least some of their workers. Even with this level of preparedness and experience, 66 per cent found meeting their duties more difficult than anticipated.
Nest says around a third of 2014 employers have no experience of pensions as they either do not offer any pension scheme at all or just have a shell stakeholder scheme in place.
Only 52 per cent of 2014 stagers said that they had a good understanding of pensions, compared with 96 per cent of earlier stagers. Nest’s research suggests that not only do some employers lack knowledge about pensions, but they have not engaged with the detail of the reforms – only 53 per cent of employers staging between February and July 2014 are aware that they can postpone enrolments for up to 3 months, with only 12 per cent planning to do so. This compares with around half of 2013 stagers applying a waiting period.
The employers Nest interviewed also found it difficult to map out the process they intended to follow as they had limited knowledge of the details of the reforms.
Nest has also identified a reality gap amongst 2014 stagers who it believes are not getting the message that they need to plan ahead and are underestimating how much work is involved and how long implementation will take. Results from TPR’s latest tracking survey with employers found that only one in 10 employers staging in 2014 say they plan to leave it as late as possible to comply. But this plan to be ahead of their deadline is at odds with the insight that only 23 per cent of employers staging between February and July 2014 have both confirmed the provider they will use and that they have done everything else they need to do in order to be ready to comply. This suggests that employers are not getting the message that they need to plan ahead, and are underestimating how much work is involved and how long implementation may take them.
Nest chief executive Tim Jones says: “The success of automatic enrolment so far, with low opt-out rates and over 2.5 million workers automatically enrolled in a workplace pension, is due in large part to the efforts of first year employers. 2014 sees a new set of employers meeting their duties and they may find it more difficult than their predecessors. Our research suggests that 9 out of ten employers will expect help to fill any gaps in experience, expectations and knowledge.
“Our research also suggests that intermediaries are gearing up to help, but it’s vital that providers, intermediaries and employers work together to ensure the next wave of employers can meet their duties successfully.”