Many small and medium-sized organisations may not be factoring in sufficient time to implement automatic enrolment (AE) schemes, the National Employment Savings Trust (NEST) today revealed.

Its new report found that many employers start planning for AE implementation just six months before their staging dates, despite warnings from The Pensions Regulator that it could take up to 18 months.

In addition, less than half of employers with fewer than 5,000 workers are yet to confirm their provider. A significant proportion of those with less than 1,000 staff members have only started to think about choosing a provider, and most small firms are yet to consider their compliance requirements.

This compares with 74 per cent of the largest organisations that have already chosen a provider for all their workers.

The report said: “One important lesson we’ve learned is that it can take a lot of time and effort for organisations to prepare for AE, and yet many only engage with the challenges around six months before their staging date. This is, of course, at odds with The Pensions Regulator’s findings that it could take employers up to 18 months to be fully ready for AE.

“Providers and advisers will need to take this into account as they prepare to help onboard employers and members into their schemes. And all this needs to be done in a manner that reduces employers’ administrative burden as much as is practically possible.”

Commenting on the report, Personal Finance Society CEO Fay Goddard advised: “Some of the biggest AE challenges will be faced by the smaller employers (employing 50-99 workers) who have never had to think about pension issues before, therefore it makes sense to start planning for AE sooner rather than later, and the key to the success here will be the quality of advice they receive.”

However, small and medium-sized organisations could see a streamlined process that may help them effectively implement AE.

Speaking at the launch of NEST’s report, pensions minister Steve Webb said: “What we will do is practice on the big guys. Learn our lessons, and then do a round of simplifications so that by the time we go into the medium and smaller-sized firms, those irritating things, things that don’t need to be there, the things that aren’t very clear, we can iron out. I think doing it all in one go in a year or so, feels like the right way to do it.

“So if pension providers or employers come across things about the way AE is being done that causes problems, we are very keen to try and streamline that process.”

Webb also highlighted areas of ‘unfinished business’, including improving the quality of schemes in order to reduce the potential of employees transferring from a good to bad scheme.

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