Pensions minister Steve Webb has hailed the early progress made with pensions auto-enrolment and downplayed concerns over low levels of awareness of its requirements among small employers.
Speaking at a Capita Employee Benefits event in London yesterday, Webb said he was 'very encouraged' by the start made by the system, under which the UK's largest employers were expected to automatically enrol their workers into a company pension at the start of the month.
He highlighted the levels of sign-up seen by an unnamed large bank which had introduced the initiative ahead of schedule. 'The first scheme was a big bank which decided to do it in July,' he said. 'They had membership of 86% and it's gone up to 93%.'
He also noted the 'high' number of employees opting into auto-enrolment at Morrisons supermarkets, one of four firms covered by the first staging date of October 1, which he said showed the 'latent appetite if you get the scheme right'.
Webb said the TV advert launched to raise public awareness of auto-enrolment had 'got people talking' and said he was not concerned about stories about small firms not knowing about what it involved for them. The government's approach to publicising auto-enrolment involves it 'working our way down the size of firms', he added.
This was echoed by Charles Counsell, executive director for employer compliance at The Pensions Regulator, who stressed that small employers would not be signing up until 2015 at the earliest.
'The understanding of small employers is low but we're reasonably sanguine about that because the staging dates are reasonably far in the future. At the moment I think it's OK,' he told yesterday's event.
'If a lot of smaller employers were out there trying to implement this now they'd be too early and should be focusing on other things.'
Setting out what employers should do to prepare for auto-enrolment, Counsell stressed the importance of them taking into account the six principles of a defined contribution pension scheme that it set out as best practice in June.
'A consultation on the six principles will set out what we expect pension providers to do and how we expect the features to be reflected and also set out our preferred enforcement approach towards this,' he said.
The importance of good scheme design was also emphasised by Webb, who said it was particularly important for small and medium-sized employers.
'I am not going to let people auto-enrol into lousy pension schemes. The risk of people auto-enrolling into not-very-good schemes increases for small- and medium-sized employers,' he explained.
The minister acknowledged that between one quarter and one third of people automatically enrolled into a pension scheme would take the decision to opt out.
'But then three years later you auto-enrol them so they decide again whether they want to stay in and eventually they'll get the message,' he said.
He added: 'Pensions will become the new normal - you have a job, you have a pension. I am not complacent but people need to be given lots of opportunities to join.'