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Expert warns over problems from increased auto-enrolment
A GROWING capacity crunch facing auto-enrolment (AE) business pension providers and independent advisers may cause chaos for North-East firms, an expert has warned.
Harry O'Connor, from wealth management firm Pearson Jones, in Bishop Auckland, County Durham, says the vast and accelerating amount of businesses due to be staged-in for AE could lead to providers shutting their doors due to over capacity.
He said many independent advisers may also be unable to cope with the volume of complex work.
The warning comes after a report from The Pensions Regulator, which shows about 3,670 companies have been auto-enrolled in the last 15 months with about two million workers choosing not to opt out.
Mr O'Connor said: “These figures indicate the scale of the challenge and potentially serious consequences for North-East businesses.
“Other data confirms that about 12,000 firms have staging dates by May 2014, and that this will rise to 90,000 a month by the end of 2017, so the situation is not going to get easier.
“This has to be seen against a backdrop of anecdotal evidence within the pensions sector which suggests a number of AE providers are already struggling.”
Mr O'Connor said AE providers, such as Scottish Life and Aviva, have already confirmed that may close their books due to over capacity.
He said: “Businesses will have the difficult task of complying with the AE regulations at a time of unprecedented demand for the services of pension providers and advisers.
“When you add in the fact that the Government is still considering the final rules, including a price cap, 2014 has potential to plunge the auto-enrolment programme into chaos.”