Auto-enrolment (AE) delayed – but don’t stop the conversations

Not surprisingly, the introduction of auto-enrolment has been pushed out from an ambitious start of 1 January 2025 to a more realistic date of end September 2025. Having everything in order from an AE procurement perspective for a January start date was always going to be a challenge, and it is right that more time is given to employers so that they too have the time to get their business AE ready. It has also been announced that the scheme will be called My Future Fund. 

A new date should also be welcomed by Financial Brokers as it gives more time to speak with employers about the impact of AE rather than rush through any short-term solutions.

The scale of AE should not be underestimated. In or around 800,000* employees will be in scope and more so each of their employers will also be impacted. Those employers will need advice about what is best for their own circumstances. Trying to have all those conversations before the 1st of January 2025 would have been a significant ask on the Financial Broker industry. However, we should not stop the conversation but instead take time to assess the needs of these employers properly.

Now is the perfect time to discuss the needs of your corporate clients

In our experience many employers start their budgeting for their next fiscal year in the autumn time.

Is there a budget for an employee benefit package?

Maybe some employers would still prefer to roll out an employee benefit package in 2025 in advance of the launch of auto-enrolment. Maybe they've already allocated budget towards some sort of employee benefits or AE in 2025. If so, that is to be welcomed.

Are there suitable alternative options?

The delay will also give time for employer’s financial advisors and the overall industry to discuss how auto-enrolment measures up against what's on offer within the private pensions industry and which is the best home and for who.

What about contribution levels?

A common theme that is coming up in many conversations regarding auto-enrolment is that of contribution levels. One easy oversight that is being made by both employers and Financial Brokers is the fact that combining the gross deduction from net salary alongside overall earnings (most occupational pension schemes have earnings calculated on basic salary where auto-enrolment is calculated on overall earnings) does mean that 1.5% in auto-enrolment is a higher contribution when measured up against the master trust/group PRSA (personal retirement savings account) equivalent. This is something that financial advisors need to consider anytime they are conversing with employers on this subject.

Take the time now to discuss the pros and cons of each offering with employers. Once a nationwide communications campaign starts, the enquiries are likely to significantly increase so it is important to be adequately prepared and informed to provide appropriate advice.

Help your corporate clients to attract and retain employees

Employers need to consider their options carefully at this point. Employees and job candidates have become a lot more sophisticated in terms of their pensions knowledge and this is having an increasing influence on their choice of employer.

Companies offering a Defined Contribution pension scheme with competitive contribution levels will enjoy a distinct advantage in the talent market while also enjoying an enhanced employer brand. And they can achieve that with the Zurich Master Trust which offers market leading active investment performance**, governance expertise and streamlined administration, all in a highly cost-effective package.

To find out more about the Zurich Master Trust, visit zurichcorporate.ie.

*Source: Auto-enrolment at www.gov.ie

**Source: Zurich, October 2024