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Public sector employers risk failing to comply with AE

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01/06/2012
Public sector employers are running out of time to make sure they comply with incoming auto-enrolment legislation, experts warn.

Public sector employers are running out of time to make sure they comply with incoming auto-enrolment legislation, experts warn.

Hymans Robertson head of public sector pensions John Wright said the largest schemes now have less than nine months to prepare and have underestimated the scale of the task.

“For the larger employers in the private sector it takes about 18 months to get ready; we think it will take public sector bodies about 12 months,” he said.

Although they will have access to a qualifying scheme, these organisations still have to put in place systems for record keeping and identifying, flagging up and processing staff members who are eligible.

In many cases this could involve a lengthy procurement process.

Public sector schemes will also be required to auto-enrol workers who may have already declined the chance to join the scheme when they were not an eligible worker, then subsequently crossed the age or earnings thresholds.

“Leaving it to the last minute is very risky – if you do not comply the fine is about £35,000 a week for the largest employers and the regulator will have to treat private and public sector non-compliance the same,” Wright continued.

Wright added that employers needed to prepare themselves for a significant hike in their contributions as the qualifying schemes they would use would have employer contributions of between 14% and 20%.

LCP principal Andrew Cheseldine said smaller public sector bodies posed the greatest risk of non-compliance, as many of them were simply unaware of their responsibilities.

“There are 1,000 that employ fewer than four people,” he said. “From the seminars I have spoken at where some of these people have asked questions, they are surprised that the AE regulations apply to them.”

Pinsent Masons head of public sector pensions John Hanratty said the level of awareness among public sector employers other than the very largest was extremely variable.

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