Back to all articles

Defying expectations, small and micro employers rising to auto enrolment challenge

For many of these smaller employers, workplace pensions are unchartered territory. With less experience, and fewer resources, there’s been speculation about whether they’ll be able to cope.

Since the launch of auto enrolment in 2012, around 6 million workers have been enrolled into a workplace pension. With most employers successfully meeting their duties, and opt out rates much lower than expected, auto enrolment is so far largely regarded as a success.

But the challenge isn’t over yet. This year, not only are volumes ramping up with 1.3 million employers set to meet their duties, the size of employers being affected is changing too. It’s now the turn of small and micro employers, with 1 to 29 workers, to follow in the footsteps of the larger organisations that have gone before. 

For many of these smaller employers, workplace pensions are unchartered territory. With less experience, and fewer resources, there’s been speculation about whether they’ll be able to cope.

To find out whether these concerns are justified, we looked at the real experiences, thoughts and behaviours of over 4,000 small and micro employers that signed up to NEST and staged in June 2015. By comparing their journey to that of larger employers who staged in the summer of 2014, results revealed:

Setting up and making payments is simpler

Smaller employers tend to have simpler worker set-up and payment processes than their larger counterparts and as a result are likely to set up with just one group of workers, and one payment source.

Smaller employers are less likely to use their waiting period

Almost half (44 per cent) of the larger employers enrolled their first workers in the three month period after their staging month, indicating that many were using waiting periods to postpone their duties. This reduced to 29 per cent for smalls and 26 per cent for micros indicating that they’re getting on with auto enrolment without delay.

They need less assistance from their pension provider

When comparing the sign up and initial set-up process, small and micro employers said they called us about half as much as the larger employers, with 27 per cent of small employers, and 41 per cent of micro employers, saying they didn’t need to call at all. Looking ahead, 72 per cent say they expect to rarely or never call NEST in the future*, with most expecting the on-going management of auto enrolment to be very easy and not time-consuming**.

About the data

*Telephone survey of small and micro employers conducted by Bright Blue on behalf of NEST between 15th and 30th October 2015 .300 small and micro employers were interviewed. All employers were using NEST and had made their first payment to NEST between May and September 2015.

** NEST conducted 20 qualitative interviews with 20 small and micro employers in August 2015. All the employers interviewed staged in June 2015 and had made their first payment to NEST.

 

Join the conversation

×