In May, many of us began enthusiastically studying our bank accounts to see if we’d secured tickets for the 2012 London Olympics.
In May, the Pensions Regulator also began writing to employers in advance of the 2012 launch of auto-enrolment.
The 2012 Olympics are balloting for 6 million tickets. But auto-enrolment will involve communicating with all 30 million working people in the UK, from 2012 onwards. There you have it. Auto-enrolment is bigger the Olympics. Someone should tell Lord Coe.
The Pensions Regulator has begun by writing to the small handful of mega employers with over 120,000 employees, but over the next six months they expect to contact the next 600 largest companies, which between them employ about a third of the UK workforce. They will then continue on towards ever-smaller companies, eventually reaching the doormats of the UK’s million-plus employers. The letter outlines the key responsibilities of the employer and advises on key next steps. It’s fair to assume that against such a backdrop the public’s interest in auto-enrolment is about to rise.
Also in May – everything comes in threes – Aviva published its latest Family Finance research. This gave a mixed picture of families’ confidence in the wider economy and their own personal finances. There were encouraging “green shoots” with a small increase in levels of saving and monthly take home pay, but personal debts also reported a rise as did levels of anxiety about the general cost of living.
The report also featured new research into families’ attitudes towards workplace pensions. This gave some valuable insight into how families in the UK may react to auto-enrolment. Encouragingly, it reported that the majority of family heads – 74 per cent – work for an employer that already offers a workplace pension, but worryingly a majority, 72 per cent, were not currently contributing. Auto-enrolment is going to mean a big change for many families in the UK.
About half seemed open to the idea of auto-enrolment, while 15 per cent felt they would opt out. The middle 35 per cent were unsure, and it’s this uncertain group that we must encourage towards staying in.
The perceived expense of pensions was highlighted as a concern by many. At the same time 96 per cent felt they had at least some spare money at the end of each month, after day-to-day essentials. Sadly, when asked how they chose to spend this spare money, “saving for retirement” fell to a lowly ninth on a list of 12 options. “Home improvements”, “treats for the family” and “treating myself” ranked higher on the list. It seems we have some way to go to boost the prioritisation of retirement saving.
The 2012 Olympics are balloting for 6 million tickets.But autoenrolment will involve communicating with all 30 million working people in the UK, from 2012 onwards
Next time you’re in London take a walk through Trafalgar Square. There you will see the Olympic clock counting down to the opening ceremony. Add 65 days to the time displayed and you’ll know how long it is until auto-enrolment takes to the stage.
To get you and your clients prepared, here are four early steps that you’d be well advised to take to get fit for the challenge.
Understand the current rules of auto-enrolment. Identify your client’s likely staging date – see www.tpr.gov.uk/staging. Understand your client’s current contribution levels. And finally, consider the financial implications of auto-enrolment on your client’s scheme
We are often told that the 2012 Olympics is all about its “legacy”. Well, it could easily be argued that the legacy of auto-enrolment will overshadow that of the Olympics in the many years to come. We support the principle of auto-enrolment and are keen to support advisers and clients in making it a success. Warming up in advance will raise everyone’s chances of success.