It’s a busy year for workplace pensions with more than half a million employers addressing automatic enrolment for the first time. If that includes you, then you’re probably becoming more aware of some of the marketing themes that are doing the rounds…
“It’s the law and you can be fined if you don’t comply”
“The Pensions Regulator is watching. They can fine you”
“Don’t do your declaration of compliance and you’ll be fined”
“Get it wrong and you’ll be fined”
“Pension providers aren’t interested in small employers”
Of course, with the exception of the suggestion that pension providers aren’t interested (which is complete rubbish) these statements are all true. And that’s, well, fine. The thing is though, automatic enrolment wasn’t introduced to raise income from fines and it’s only an unnecessary burden if you choose to see it that way.
So why was automatic enrolment introduced?
You may have noticed that people are living a lot longer these days. But do you know by how much? The graph below was produced by The Pensions Regulator to explain why pension savings are so important. It shows how life expectancy from age 65 is likely to change in the years ahead.
There are currently four people of working age for every pensioner by 2050 there will be just two! This is extremely important – the state pension is paid as we go along by working people. Half as many people paying in means everyone paying twice as much. Now can you see why the government are doing this?
OK, but my staff aren’t interested!
Maybe they’re not. But would they be if they sat down for a few minutes and considered what it would be like to live on £155 p.w.? If they then work out what they’ll really need each month and then multiply by 12, and then by the number of years they’ll be retired for, you might just hear them gulp.
Look after your staff and they’ll look after your customers
The thing is, no matter what you think of politicians, this is important stuff. Older generations are retiring at the moment with good company pension schemes and higher state pensions. But the younger generations will not be, and if they don’t start taking this more seriously, there are massive problems ahead for them in the future. The lights at the end of the working life tunnel really are a train.
You have to do this anyway. It’s the law. But you can do more; you can take more care in choosing a scheme; in communicating its benefits to staff; by designing it to suit the way you pay your staff; by being seen to take it seriously. You can show you care.
Hmm, so is it a tax or an employee benefit then?
That’s for you to decide. It’s your choice.
Yeah, but the admin is horrible
Well, maybe. Maybe not. It depends. Find out more by downloading our free guide at www.kentpensionservices.co.uk/automatic-enrolment/
Ken Tymms is Director of Kent Pension Services