3 years of auto enrolment: number of affected businesses grows by 3500 per cent

• Auto enrolment introduced 3 years ago today
• Step change in volumes, from average of 58 a day to 2,000 a day
• Simple steps employers can take to get ready
• NEST data on the first wave of small businesses shows that concerns for this cohort may be unfounded
• Intermediaries can harness technology to help deliver

Three years ago today (1 October 2015) saw the introduction of automatic enrolment to the UK. With over 5 million workers enrolled to date and up to a further 5 million workers to be enrolled, today marks the halfway point for consumers.

The three year anniversary also heralds a step change in the number of employers coming under the duties. Around 64,000 employers have met their duties in the last three years but there are a further 1.8 million to set-up a scheme between now and 2018. An average of 58 employers enrolling each day over the last 3 years rockets to an average 2,000 a day for the next stage of auto enrolment, growing by around 3500 per cent.    

Employers from the wholesale and retail sector are one of the biggest groups, with around 210,000 employers yet to set-up a scheme, as well as professional and technical services (216,000), construction (161,000) and administration and support (92,000).

As well as unprecedented numbers of employers setting up an auto enrolment scheme, they’re unlikely to have experience of offering a pension. NEST research1 found that only 26 per cent of small and micro employers currently offer a pension scheme.

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 source2. NEST research3 also shows that employers are looking for help, with around three quarters saying that they expect to turn to an intermediary meaning that intermediaries have a crucial role to play in the next stage of auto enrolment.

Helen Dean, CEO of NEST, commented:|

‘It’s been three years since auto enrolment launched in the UK and today marks the halfway point but this is also where volumes really ramp up. Having only had only 4 per cent of employers meet their duties so far, there are going to be around 35 times as many employers staging in the coming years. This is when the business world really gets to grips with auto enrolment.

‘With an average of over 2,000 employers each day, technology is going to be crucial to this next half of auto enrolment. The pension industry needs to have developed automated propositions that can work at high capacity. Harnessing technical capability, like web services, and using online solutions such as NEST Connect is going to be the key to success in the next three years. Intermediaries continue to have a critical role to play.’