Your IndustrySep 3 2015

People’s Pension warns advisers are giving bad AE advice

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People’s Pension warns advisers are giving bad AE advice

Legislation is one of the key challenges facing the second phase of auto-enrolment (AE), as some providers and regulators are sceptical that advisers do not fully understand the processes.

The second phase – where those who opted out in the initial phase are re-enrolled after three years – is set to begin next year, yet implementation may face further challenges.

Roy Porter, director of business development at The People’s Pension, said the company’s employer research had identified a lack of adviser understanding as a challenge facing the market.

“There is a problem of many advisers not understanding and giving bad advice. There are a lot of advisers out there who are not experts in the area,” he said at today’s CIPP Conference.

Despite this, Mr Porter said the second phase of AE could present a great opportunity for advisers who were involved in the first phase to provide continued support and expertise in the second phase.

In addition to a lack of adviser understanding of the legislation, further obstacles were identified, such as payroll challenges, worker assessment, employer communication with their employees, and choosing an appropriate cyclical auto-re-enrollment date.

James Markham, managing director at SBC Systems UK and B2E Technologies, brought up a further three challenges facing the re-enrolment stage.

First, onboarding needs to be a “quality-focused activity” complete with accurate data input.

Mr Markham said the people responsible for doing the data input are “from all walks of life” and that providers “must seduce people to do what you want them to do.”

Additionally, integration is heavily manual at the moment, making it expensive.

He said this process should be streamlined to make it more efficient, which would be helped in part by a common data standard across the market.

Lastly, multi-tenancy arrangements, where multiple clients sit on one platform, are difficult to maintain, and can often outstrip profitability.

It is no longer possible to make last-minute adjustments for a single person just before the staging goes live, he warned.

Mr Markham added that many providers do not really know their clients and do not understand how their data moves.

This burden would be lessened by getting clients into the onboarding process a few months before it goes live, allowing time to make adjustments for individual cases, he said.

While many may underestimate the problems which may arise from the second phase of AE, client management and communication at all levels should be stressed, along with proper data input and forward planning.

This article was updated on 8 September 2015 to reflect the fact that Roy Porter was quoting research among advisers, rather than stating his own views.