An increasing proportion of small UK companies are establishing auto-enrolment pension schemes after their deadline, according to data from Aviva.
The insurer and auto-enrolment (AE) pension provider said 16% of companies that set up their arrangements with Aviva in the first quarter of 2017 were late.
The Pensions Regulator (TPR) announced this week that half a million employers had now complied with their AE requirements, meaning 7.6m people were now invested in a defined contribution pension scheme.
Another 600,000 employers are due to begin the AE process this year, the regulator said.
However, those that have delayed implementing their AE pension were “putting themselves at risk of a fine”, Aviva warned. They were also potentially limiting their choice of providers as not all providers would take on “late stagers”, the insurer added.
TPR can issue non-compliant firms with an Escalating Penalty Notice, giving a deadline for meeting requirements. If the company fails to meet this deadline, TPR can begin to fine it every day until it complies with AE. The fine for small employers with up to four staff is £50 (€59) a day, and those with between five and 49 employees can be fined £500 a day.
Andy Beswick, managing director for business solutions at Aviva, said: “As an industry, we’ve been talking about auto-enrolment since the early 2000s and implementing it for over four years now. But to thousands of employers and employees, it is still a brand new concept and we need to make sure people aren’t getting left behind.”
DB funding improves in Q1
The PPF’s 7800 index of DB schemes reported an aggregate shortfall of £226.5m at the end of March, compared with £242m a month earlier. The aggregate funding ratio increased to 87%. The deficit and funding ratio figures have remained at a broadly similar level since November 2016, the PPF’s data showed.
Other estimates of DB funding have demonstrated an improvement since the start of this year. JLT Employee Benefits reported a £434bn shortfall across all private sector DB funds at the end of 2016, but by the end of the first quarter of 2017 this had fallen to just £172bn, in part down to a change in mortality assumptions.
Mercer’s estimate of the funding of FTSE 350 schemes was more in line with the PPF’s findings: The aggregate deficit improved slightly from £137bn to £133bn in the first three months of the year.
Joint venture between actuarial services providers
Actuarial firms Barnett Waddingham and Milliman have established a joint venture.
Barnett Waddingham’s UK business will combine with the international Milliman under the MBW International banner, the groups announced this week.
For Barnett Waddingham, which only serves the UK, the joint venture would allow the group to improve its services to multi-national companies, said Nick Salter, senior partner. The nature of the deal also allowed the company to keep its partnership structure, he added.
Steve White, Milliman CEO, said: “The establishment of MBW International enhances the range of retirement consulting services Milliman can offer its multinational and UK-headquartered clients. The obvious synergies between Milliman and Barnett Waddingham are built on our shared values: independence, quality, and dedication to superior client service.”