Pensions ‘ticking timebomb’ as auto enrolment deadline looms

There will be widespread non-compliance for auto enrolment in 2016, a majority of senior payroll professionals say, despite significant financial penalties for small and micro businesses which fail to meet the staging deadlines

The Chartered Institute of Payroll Professionals (CIPP) is also warning that the UK faces ‘a pensions ticking time bomb’ with low levels of awareness of requirements for auto enrolment (AE) pensions across small to micro businesses.

Delegates at CIPP’s Capacity Crunch Conference in London last week found that 82% anticipate small and micro businesses will not meet auto enrolment requirements on time from January 2016 in order to provide pensions for employees.

The Friends of Automatic Enrolment (FoAE) industry group, which organised the event, has published a new guide designed to help small and micro businesses through the process.

Andy Agathangelou, founding chair of FoAE, said: ‘We know from speaking to our members and the industry that many people have flagged the issue of how small businesses have concerns and pressing questions. The guide will act as additional aid and help businesses through auto enrolment and hopefully put many people’s minds at ease.’

At the same time, the latest CIPP annual survey into pensions awareness and takeup found that two thirds (66%) of 20-24 year olds have made no pension plans, while more worryingly a third (36%) of those aged 51-60 have no pension provision.

In addition, 30% of respondents overall were not even sure if their pension pot will be enough to live on and 24% said they were too young to even think about a pension.

Lindsay Melvin, CIPP CEO, said: ‘In these uncertain economic times we would hope most people are thinking about their future, but these results show over a third of those towards the end of their working lives are not planning financially for their retirement and some are not even sure they will have enough to live on.

‘With the government putting pensions at the forefront of its agenda it’s even more disturbing that so many people are taking a relaxed attitude.’

The government announced major pensions reforms in 2014, allowing anyone over the age of 55 to crystallise their pensions pots and removed the requirement to purchase an annuity.

At the same time, all employers have to offer auto enrolment pensions to staff, regardless of the company size, although individuals can opt out of these work-placed schemes.

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Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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