HR teams will face a new set of challenges and bigger workloads under the government’s auto-enrolment pension plan, industry experts have warned.
Reform of the Pensions Bill is at parliamentary committee stage, following a second reading in Parliament earlier this month.
Under the proposed rules, after 2012 pension schemes must be revisited at least every three years, when any employee without a pension is automatically opted in again, either to a company pension or the government’s personal account scheme.
Rachel Vahey, head of pensions development at financial services firm Aegon Scottish Equitable, said that along with the additional costs, employers would be required to register with the Pensions Regulator to say whether they were using personal accounts or an alternative scheme.
Vahey told Personnel Today: “Employers may have to hand out literature to employees, put in place payroll administration to deduct contributions, answer questions from employees, and keep a note of who needs to be ‘re-auto-enrolled’ again after three years.”
Michelle Lewis, senior policy adviser at the National Association of Pension Funds, said: “The new auto-enrolment requirements will involve extra responsibilities for most HR staff, both for employers that offer their own pension and for those that use the government’s personal accounts.
“For long serving employees, it may well lead to conflict with their employer, as they would not want to go through the process of opting out each time. HR teams will need to ensure that an efficient system is in place.”
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Steve Herbert, senior benefits consultant at financial advice firm Origen, said the reforms could also create additional admin where an employer ended up with two active schemes with potentially different pay dates, salary basis and destinations for the contributions.
Last week Personnel Today reported that asking applicants about their pensions at job interviews could lead to heavy fines for employers.
