Auto-enrolment is a business problem not a pensions issue
Auto enrolment is a massive opportunity for advisers, particularly if using an independent middleware solution, says Steve Selby, partner, The Affinities Partnership
Over the last 18 months, we have travelled extensively speaking to employers about the new responsibilities that auto enrolment will bring to them, and also to advisers about the fantastic new business opportunity that it represents for them.
It is fair to say that in the early months, many advisers were apathetic regarding auto enrolment, especially those who in their own words “do not write corporate business”. However, attitudes have been changing as they have started to appreciate that even their High Net Worth clients work for or own companies who may be in need of assistance with auto enrolment – and if they do not help educate their clients, they can be sure somebody else will.
Advisers examining this area may wish to consider working with independent consultants who are not authorised advisers and, therefore, are able to talk about auto enrolment as a business problem and not a pensions issue.
From a business perspective it is worth considering just what employers will have to do to be compliant. This includes:
• Assess employee eligibility.
• Ensure that their pension schemes comply with all regulations.
• Manage the enrolment process for all employees.
• Manage and update the opting in/out of employees.
• Manage contributions.
• Ensure that inducements to opt out are not offered.
• Provide regular updates and employee communications.
• Re-enroll opted out employees on a regular basis.
• Register with the regulator.
• Keep accurate records of all of the above.
• While running a business at the same time!
The time to act is now
The Pensions Regulator has said that rolling out the process will take between 12 and 18 months and it is imperative that the education process begins now. It is certainly not prudent for companies to wait until shortly before their staging date as there could possibly be tens of thousands of companies all thinking along the same lines. In many cases pre staging date communications are almost as important as post staging date communications. Advisers should also not underestimate just how long it can take to ensure that all employee data is correct and complete.
Many employers and advisers have already decided to delegate the compliance to the pension provider but is this wise? There have been press articles regarding insurers having resource/capacity issues already – and this is before the great rush!
Should the compliance solution ever be considered as an integral part of an adviser’s reasons to recommend a provider? If an independent middleware solution is used, the adviser is free to recommend any pension provider of his/her choice.
An independent solution can offer:
• The ability to take care
of compliance now, put the solution in force but not switch it on or charge the client until the staging date approaches.
• Full regulatory pensions compliance for auto enrolment.
• Management of all pensions data, administration and documentation.
• Assurances that the system will cope with future regulatory changes.
• Intelligent opt in/opt out functionality – employee managed.
• Flexible employee benefits platform.
• Pensions and benefits management
• On line access for individual employees.
• On line pay slips.
• Optional payroll (RTI compliant) solution.
There are many potential income streams available to advisers, not least the opportunity to be remunerated for implementing the middleware. Obviously there are new pensions schemes to be written and new members to existing schemes to be added. However, an independent platform also allows a bespoke range of employee benefits selected by the adviser to be offered as well as many other value added services ranging from wills and trusts to general insurance and lots more.