Partner Article

BT’s Kevin O’Boyle talks to Bdaily

While the decision to introduce auto-enrolment, and the subsequent stall in its introduction, has proved controversial among small business, the impact on larger corporates could prove to be quite different.

Bdaily spoke to head of pensions at BT, Kevin O’Boyle, to find out just how big business is preparing for the changes.

“We are lucky that we’ve had this system in place at BT, since the year dot. There are amendments and changes that need to be, as people either have to opt in or opt out, so this will create some work.

“In a sense it will be simpler for us than most who don’t have such a system in place.”

As a large company with an existing pensions infrastructure, Kevin is confident that BT can absorb the changes comfortably, but notes that smaller businesses may feel the strain.

“Perhaps the biggest challenge will be that we still have to track employees. The new system dictates that you are not eligible for enrollment until the age of 22. Therefore, if we have a 16-year-old working for us, the Government does not recognise that they have been auto-enrolled, and we have a duty to track that employee as they decide what they are going to do.”

“In smaller companies, where perhaps the payroll and HR consists of a small file, it might create difficulties. I have no doubt that smaller companies will be able to cope with the changes, however in a business where there is no pension scheme, this will seem totally alien to them.”

“The BT’s and larger corporates usually have in-house expertise, so they will be best placed to handle the change. It’s unlikely that as you get into smaller firms, they will have the sophisticated software and systems in place. You need a quality HR and payroll to deliver the level of service required.”

He remains wary of the effectiveness in the scheme, highlighting the relatively small level of contribution that is required.

“I think the contributions required are still going to be too small. Over the next few years it stands at about 1% for employees and 1% for employers. And with annuity rates as they are, this will only buy about £20 of pension.

“For people on lower incomes, day-to-day spending is still most important. It could be that it will actually disenfranchise many of those that are the target.”

This was posted in Bdaily's Members' News section by Tom Keighley .