Failing to prepare is preparing to fail – Smart Pension

Failing to prepare is preparing to fail – Smart Pension



Will Wynne shares his thoughts on some of the challenges that SMEs might face when it comes to auto enrolment

We are fast approaching two and a half years into the government-mandated pension reform, auto enrolment, with over 45,000 employers enrolling more than 5 million employees across the nation onto a workplace pension scheme. The initiative hopes to reduce the number of people having to rely solely on the state pension when they retire, which has been a growing concern for government over the years. By 2018, there will be as many as 9 million people in the UK that would have been automatically enrolled into a workplace pension scheme.

As of 1 April this year, employers with between 50-53 employees will have hit their staging date and will have to start automatically enrolling them into a workplace pension scheme. However, research carried out by The Pension Regulator shows that a large number of employers are still not fully aware of what it is they are required to do and when.

Typically, smaller companies don’t have the luxury of time on their hands or the resources; they often have to outsource their payroll function. Many of them would also have no experience in pension schemes whatsoever. Auto enrolment has the potential to therefore disrupt many SMEs across the UK. As a result, there has been a rise in the number of penalty notices that have been issued to employers who have failed to carry out their pension obligations on time. If employers fail to comply, enforcement action will be taken, with the worse case scenario being thousands of pounds in fines and even imprisonment.

If you’re not sure when your staging date is, you can check out Smart Pension’s interactive auto enrolment planning tool ( for an estimate which is completely free to use or you can find the information on The Pension Regulator website. If you think you have missed your staging date, you will need to get in touch with the Pension Regulator immediately.

Research and planning

There are many things to take into account before a company is ready to sign up their employees onto a new or existing workplace pension scheme and it is advised that they do their research in plenty of time.

The Pension Regulator advises that you should start a plan of action as far as nine months in advance. Leaving yourself with less time will increase the risk of not being fully prepared when your staging date arrives. Many companies, particularly the smaller ones and ones that are unfamiliar with and have little or no experience in pension schemes, will be relying on advice and guidance from financial advisors. So as you can imagine, it will be an incredibly busy time for them and things may take longer than normal. At Smart pension, we have tried to provide access to useful tools such as our Employer’s Guide to Workplace Pensions and our Interactive Auto Enrolment Planner to help employers through the research and planning  process.


As an employer, you will need to assess whether auto enrolment is something you want to manage yourselves, if possible, or whether it’s something you will want to outsource to an external service provider.

It will depend on a number of things with cost being a primary factor. Even if you choose to outsource the function, it is still the responsibility of the employer to ensure that they are legally complying with the requirements of auto enrolment such as minimum level of contribution or you run the risk of being fined for non-compliance. Therefore it is essential that the employer is well versed in the rules and regulations of auto enrolment.

If you plan on running an automated pension plan yourself, you will need to make sure, first and foremost, that it is compatible with your payroll system and that it is capable of making the correct level of contributions and deductions from employees. We understand that cost is often one of the most important factors in decision making.

As an easy to manage and cost efficient option for employees, Smart Pension offers to sign up employees onto a standard plan at zero cost to the businesses that sign up. Our contributions calculator tool also works with inputs from any payroll provider so your payroll doesn’t need a complete overhaul or heavy administration in order to work in conjunction with the auto enrolment set up.


An employer will need to assess its staff to see whether or not they meet the qualifying criteria, which is primarily based on age and salary.

Even if a number of employees fall outside of the requirements, the employer will need to monitor them in the case,  at some point, they may begin to qualify to be enrolled onto the workplace pension. Things become a little more complicated when ineligible employees request to be ‘opted in’ to the workplace pension, which they are entitled to do so.

Also, employees that qualify and therefore are enrolled onto the pension scheme may ask to ‘opt out’, which again they are entitled to do so but there are rules and stipulations which the employer will need to understand, such as at what period they are able to do that and when the next period of re-enrolment will apply to them. The introduction of the workplace pension will be a big shock for many employers especially when they add up the numbers of the monthly contributions, which is currently set to increase from 1% up to 3% by October 2018.

The Smart Pension platform is designed to help employers to stay on top of pension duties every step of the way so that the employer always remain compliant, such as assessing staff at every pay run, ensuring they easily manage changes with regarding existing/new staff, handling changes in employee pay levels and complying with legislative changes such as mandatory contribution rates.

The main point is, employers need to get on board as soon as possible and ensure they meet the stipulated deadlines and requirements. Failure to do so will could lead to penalties that will cost them more in the long run. Employers also need to be aware that the Pension Regulator will be investigating employers at every stage of the auto enrolment process.


 Will Wynne is co-founder and managing director of new UK workplace pension platform, Smart Pension 

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