The GREAT Auto Enrolment opportunity? - An advisers' guide to helping clients through the pension reforms
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The GREAT Auto Enrolment opportunity? An advisers’ guide to helping clients through the pension reforms March 2014 For information purposes only. Some of the service suggestions within the document may only be provided by individuals or organisations who are regulated by the Financial Conduct Authority.
Auto Enrolment is like playing a game of snakes ladders The 2012 Pension reforms, better known as Auto Enrolment, was an opportunity that some approached with caution when the legislation was first introduced. Now, some 18 months on, Auto Enrolment has seen itself become a hot topic, as many advisers are beginning to recognise and benefit from the significant commercial opportunities that lie ahead. The size of this opportunity will be determined by your appetite to formulate an advantageous client proposition. It’s at times like this when careful planning can pay dividends.
October
June 14,800–14,900
13,100–13,100
July
May 12,600–12,700
12,2000–12,300
April
6,100–6,200
April
March 3,700–3,800
3,200–3,300 Staging dates continue
and peak at 134,200 for
August October November January companies in 2016
600–700 700–800 600–700 700–800
Number of companies due to Auto Enrol in 2014 Number of companies due to Auto Enrol in 2015
Myth
It will be wrong to assume that payroll providers will
ensure that employer data complies with regulations.
It is the duty of the employer and their adviser.
Setting the scene:
The inevitable ‘capacity crunch’ on the horizon
Many involved with Auto Enrolment can feel a degree of satisfaction that it’s a case of so far, so good.
Opt-out rates are lower than anticipated and public perception has been largely positive. But now things are
about to change as we welcome the SMEs into the arena – in fact some 12,000+ companies during the middle
of 2014. And many of them are heading towards their advisers for support and expertise.
This guide highlights six main areas that advisers could consider when establishing a client service proposition.1. Scheme review 2. Employee and
and selection data assessment
Scheme review tends to be the starting point for advisers. Data assessment is a core requirement of the Auto Enrolment
Employers are keen to establish from the outset whether their process, as it will ensure you enrol the right employees at the
existing workplace pension arrangement qualifies under the right time, paying the correct contributions.
terms of Auto Enrolment.
The perception is that NEST (the government’s workplace pension
If their scheme does not qualify then the employer may seek the solution) and other major providers will handle the data assessment
necessary guidance to either adapt or seek an alternative provider as part of the package they offer. Some don’t, many charge and
arrangement. Indeed, employers may also use Auto Enrolment not all providers can complete assessments fully.
to motivate a larger employee benefits remuneration evaluation
exercise – an area that would represent a significant opportunity Advisers are recommended to have their own inhouse data
for advisers. assessment and cleansing system which they can use, at will, and of
course command a fee for. A web-based tool is preferable meaning
Added value at a glance: no installation or ongoing systems maintenance. Greater control also
reduces the risk of non-compliance and any potential penalties.
Existing scheme for compliance review
Added value at a glance:
Alternative scheme and/or provider selection
Employee eligibility assessment
Broader employee benefits package review
Data cleansing and formatting for payroll
Please refer to the 1998 Data Protection Act for more information.10% 1% 5%
3. Contribution levels 4. Communicating
Typically employers will look to their advisers when it comes
to calculating appropriate contribution levels. with employees
Advisers working through Auto Enrolment with existing clients Surprisingly many employers look to their advisers for what they
will be able to use their insight to judge scheme affordability, view as ‘financial education’.
whereas advisers working with new clients will gain exposure to an
employer’s wider financial standing – opening up an opportunity Handled incorrectly, and employees will be left feeling robbed of
to offer additional services. their pay cheque. However, presented openly and well in advance,
employers could experience a more positive reaction from employees,
In particular employers may be keen to get an understanding of through improved retention and a greater appreciation of benefits.
how Auto Enrolment has impacted their business particularly in
relation to remuneration costs. A good quality Auto Enrolment system will issue employee
communications automatically. Better still, by selecting your
Advisers will also be well placed to demonstrate why planning own inhouse system, advisers are able to control the timing and
ahead will be more prudent and represent less impact of presentation of the communications. Some providers will offer
business as usual. communications as part of their overall solution, but this tends
to be less favourable as advisers will loose control of the process
Added value at a glance: whilst maintaining overall accountability if issues occur.
Contribution levels guidance (general) Added value at a glance:
Contribution levels guidance (individual)
Statutory communications (joining letters, opt-out forms etc.)
Employee education (additional communications)5. Regulatory 6. Scheme reporting,
compliance analysis and re-enrolment
The Pensions Regulator will enforce non-compliance by An adviser’s role needn’t finish once the Auto Enrolment cycle
issuing statutory notices and fixed or escalating penalties. has completed.
You can help your clients avoid this by understanding the compliance Indeed, in many ways a company’s staging unlocks the potential to
requirements, one of which is for the employer and the pension provide reporting and ongoing financial advice as part of an employer’s
scheme to keep certain records. annual review.
http://www.thepensionsregulator.gov.uk/docs/pensions-reform- Most employers will be very interested to get a picture of how
compliance-and-enforcement-quick-guide.pdf successful Auto Enrolment has been for them, giving advisers the
option to provide analytics. And before you know it, once three years
Above is a link to the Pensions Regulator’s enforcement strategy pass, it will be time to conduct re-enrolment!
and regulatory approach. Responsibility for complying with the
Added value at a glance:
duties ultimately lies with the employer. However, as an adviser,
there are third party compliance obligations which you must be Annual scheme review
aware of when carrying out these activities on behalf of your clients.
Re-enrolment (every three years)
Added value at a glance:
Guidance on record keeping and other compliance measuresHow can help
your Auto Enrolment
service proposition
So these are the six main areas that we think could help
you add value and ultimately determine your clients’
Auto Enrolment success.
1. Scheme 2. Data 3. Contribution
Full colour (CMYK)
review assessment levels You could choose to charge this package – or elements
of the package – on a fixed fee basis, removing the need
to bespoke your proposition each time, whilst giving your
client complete cost transparency.
eAsE, one of the leading Auto Enrolment solutions,
can help you provide this complete experience through
use of our data management and communications tool.
4. Employee 5. Regulatory 6. Scheme
comms compliance reporting
To arrange your free demonstration please
contact us on 020 7648 9990 or email
info@enrolwithease.com.Powered by ITM Limited www.enrolwithease.com
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