Don’t say the government never gives you anything, says Steve Bee
All employers in the land will soon be faced with complying with the duties laid on them by the 2008 Pensions Act. The what, I hear you say? Oh dear, where have you been for the last few years? The 2008 Act is the big one as far as UK employers are concerned; the duties it imposes on employers are not to be sniffed at. Absolutely not!
Basically, the way things are about to pan out is this. All employers, even those employing only one employee, must soon make something called a Qualifying Workplace Pension Scheme (or a QWPS if you prefer) available to all their eligible employees. It also has to be available for employees who are not eligible, but life’s too short to go into the ins and outs of all that here.
One of the QWPS options open to employers is the National Employment Savings Trust, or NEST for short. NEST is a default QWPS (keep up at the back there!) which was put in place by the Personal Accounts Delivery Authority (the PADA – don’t even ask, it’s a long story…)
Anyway, the bottom line is that all eligible employees will need to be auto-enrolled by their employers (one of said duties) into a QWPS once any particular firm reaches its staging date. Its what, you ask? It’s staging date; there are forty-three of them and they’re kicking off from October 2012 and run on until September 2016. Basically, employers should regard them as their sort of go-live date for the new reforms.
Something like 1.3 million employers have been given their places in this longish queue and will simply have to wait their turn and then do what they can to hit the ground running on the pensions front when their turn eventually comes. This is something that I would expect will come as second nature to the larger firms who have been chosen to go first, as they will be the ones with professional HR and (probably) pensions functions within their organisations. I mean, if they can’t cope what hope is there for the rest of the field?
But sooner or later the SME firms and the smaller so-called micro firms will find it’s their turn to step up to bat – and that’s when I think some may struggle. The subject of pensions, although it’s second nature to many of us engaged in the financial services industry, remains something of a mystery to the other 99.99% of the population. No, I don’t understand why either, but that’s the way it is, so that’s that.
Given that this stuff just doesn’t come naturally to most people – including most employers – it seems to me that the IFA sector in the UK will have its work cut out for the next five years or so, just with helping the SME and smaller firms to come to grips with all this.
I’ve heard some people saying lately that the IFA sector is dead; something that has been said many times and on many occasions before. It was clearly wrong to say such things back then – just as it’s surely wrong now…