Newly released data from Aviva shows that a record proportion of companies are setting up their workplace pension after their deadline has passed.
- 25% of businesses setting up their workplace pension with Aviva had missed their staging date in Q3 2017.
- 56% of businesses are setting up their workplace pension at the last minute.*
- New rules mean start-ups must prioritise pensions as soon as they make their first hire.
Newly released data from Aviva shows that a record proportion of companies are setting up their workplace pension after their deadline – known as a staging date – has passed.
The figures for July, August and September this year show that 25% of businesses applying for their workplace pension with Aviva did so after the date set for them by the Government watchdog, the Pension Regulator (tPR). Businesses that miss their staging date put themselves at risk of a fine and limit their options for a pension scheme because not all providers will accept ‘late stagers’.
Latest figures from tPR show that in Q2 2017 it handed out almost 4,800 fines of £400 each to businesses that had failed to comply with their AE obligations.**
The table below details the proportion of Aviva’s workplace pension applicants who applied during 2016 and 2017 in comparison to their staging month.
|Quarter||Application made after staging month had passed||Application made in the month of staging date||Application made in the month prior to staging date||Application made 2 months prior to staging date||Application made more than 2 months prior to staging date|
Planning ahead drops off
The proportion of companies sorting out their workplace pension two months or more ahead of their staging date has dropped to one in five (19%) – the lowest since Aviva began publishing the data.
However, this trend can in some way be expected. Firstly, some businesses may have only formed in the last 12 months so haven’t had as much opportunity to plan in advance. Secondly, changes to the way auto-enrolment is rolled out mean that there are now fewer companies that have a staging date more than two months away, in turn increasing the proportion of companies leaving it late.
The future of auto-enrolment
Auto-enrolment in its current form, with businesses planning around staging dates, will only continue into the early part of next year. Significant changes are already taking place.
Since 1 October 2017, staging dates are no longer being given to new businesses. Instead, new companies will have auto-enrolment duties as soon as they hire their first employee and pay them a salary over £10,000.
Businesses also need to prepare for an increase in pension contributions. From April 2018 employers must contribute a minimum of 2% of an employee’s qualifying earnings, up from the current 1%. Employee contributions will be rising from 1% to 3%.
Andy Beswick, Managing Director of SME Solutions at Aviva, said:
“As we reach the end of staging dates for businesses it’s clear that there has been an increase in the proportion of companies missing their deadline. But employers need to understand the implications. Not only could they be fined but, unlike Aviva, not all pension providers will take on ‘late stagers’ so they are limiting their choice.
“Auto-enrolment has been a fantastic success so far with millions of people now saving for their retirement. But businesses and individuals need to be ready for the next phase.
“Start-ups, or sole traders beginning to take on staff, must put their pension scheme in place as soon as they hire their first employee. They will have to factor the contributions into their costs and be aware that the vast majority of people stay in the pension scheme.
“And both employees and employers also need to be aware that the level of compulsory contributions is increasing in April to 2% for employers, and 3% for employees.
“Higher contributions can help to contribute to a better standard of life in retirement and can be a useful tool in recruiting and retaining talented people. But both employers and employees need to be ready for the changes that are coming.”
*Last minute is made up applications made in the month of staging (25%) and the month prior to staging (31%)
Ben Moss, Senior Media Relations Manager +44 (0)7827 832 395 / 0117 928 5843 firstname.lastname@example.org
Notes to editors:
- Aviva provides life insurance, general insurance, health insurance and asset management to 33 million customers.
- In the UK we are the leading insurer serving one in every four households and have strong businesses in selected markets in Europe, Asia and Canada. Our shares are listed on the London Stock Exchange and we are a member of the FTSE100 index.
- Aviva’s asset management business, Aviva Investors, provides asset management services to both Aviva and external clients, and currently manages over £340 billion in assets. Total group assets under management at Aviva group are £450 billion.
- Aviva helps people save for the future and manage the risks of everyday life; we paid out £34.4 billion in benefits and claims in 2016.
- By serving our customers well, we are building a business which is strong and sustainable, which our people are proud to work for, and which makes a positive contribution to society.
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