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03 Feb 2014

NEST Warns Of 2014 Auto-Enrolment Challenges

The next 12 months are crucial for the successful implementation of automatic enrolment, and employers should be careful to avoid several pitfalls that may prove an obstacle to compliance, the National Employment Savings Trust (NEST) has warned.

New research from NEST identifies three major challenges that could potentially play a major role in auto-enrolment for medium and small-sized businesses. In a statement published on its website, NEST identifies these as an experience gap, a knowledge gap and a reality gap, warning that unlike employers from the first auto-enrolment stage, smaller companies may be less engaged with the impending reforms.

The first problem - the experience gap - may present employers with the biggest challenges in terms of successful implementation. NEST said that about one in three of the businesses that have to enrol their staff will not offer any pension scheme at all, or will only have a shell stakeholder scheme. By contrast, last year all employers offered a pension. In addition, just over half of those about to implement the reforms think they understand them well, compared to 96% of the large employers that did so last year.

This problem is linked to the knowledge gap, as many businesses were found to lack basic knowledge about this year´s reforms. For example, just around half of businesses due to auto-enrol staff this year knew they could postpone the reforms, with just 12% planning to do so, while last year half of all businesses applied for a delay.

The reality gap could also be a serious challenge, as NEST found that many employers planned to postpone auto-enrolment until the very last possible moment, which suggests that they do not understand the importance of planning ahead.

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