How to help your smallest clients through staging

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NEST
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Supported by
NEST
How to help your smallest clients through staging

According to Chris Daems, director for Cervello Financial Planning, says there are "specific factors" in helping smaller employers comply with auto-enrolment, as these are the employers which are less likely to have sophisticated payroll, HR or accountancy resources in-house.

Mr Daems says: "The first is to ensure everyone involved in auto-enrolment is clear on the tasks they need to complete."

Motivating employers to do their duty is also an imperative, says Andy Agathangelou, founding chairman of the Transparency Task Force. 

Technology automation is the only answer. Natanje Holt

He comments: "The most important thing to do is to motivate employers to take action in a timely way, and that will often need robust communication which makes it clear what the consequences of non-compliance are."

Moreover, according to Glynn Jones, divisional director for group savings and investments at LEBC, many financial advisers have "mostly exited" auto-enrolment, which means employers without in-house payroll and HR functions will need the very best information available to help get them through the staging process.

He says: "A few [advisers] remain and are set up to advise on a wide scale, through introducers such as accountants and payroll bureau, but many schemes are set up without advice from a financial adviser."

Automation and information

Technology is the big factor at play for any employer going through staging but especially so for the smallest employers, who may not be able to pay for independent advice.

Natanje Holt, retirement expert for Bravura Solutions, says: "Technology automation is the only answer, as smaller employers simply do not have the money to pay for the service, whereas advisers need scale in order to make it profitable."

Mr Daems agrees: "Automate as much of the process as possible. This usually includes using the most appropriate payroll software and sometimes project management tools to support the employer and the professionals with whom he has chosen to work."

The Pensions Regulator must show some teeth and explain what needs to be done, by when, and leave employers in no doubt.Graham Peacock

Martin Olive, strategic partnership manager for Now:Pensions, says: "Inevitably, for most small to micro employers, auto-enrolment is a time-consuming burden and an administrative nightmare, especially since these employers do not always have the time, money or available resource to set up a suitable and compliant workplace pension scheme.

"Therefore, it is easy for directors of firms to bury their heads in the sand."

While Robin Armer, senior business development manager for NEST, agrees advisers need to do a thorough check to ensure the recommended provider will deliver the best outcomes, and has the appropriate badges of quality, he says there is more to look for.

He comments: "With a number of schemes attaining all or many of these badges of quality, we need to dig deeper.

"A thorough assessment of the default fund should help advisers to cast the deciding vote. After all, with approximately nine out of 10 workers remaining in the default fund, the impact of its quality is likely to be significant."

Therefore, Mr Armer adds, while cost and performance are important considerations, other assessments such as strong governance and protecting members' interests, should also perform part of the information-gathering process before a recommendation is made.

Duty to comply

Graham Peacock, managing director of Salvus Master Trust, believes advisers or providers should not be carrying the can for smaller employers - it is ultimately the duty of the employer.

He explains: "It's not about advisers or providers helping: the duty falls to the employer, such as paying tax or national insurance or paying staff.

"It is something that whoever runs payroll must deal with. Employers must get involved, get set up, choose a pension and then run auto-enrolment or find a payroll professional who will do it for them.

"They cannot continue to delay and bury their heads in the sand and then expect advisers and providers to pick up the pieces."

Yet whether the government and various regulatory bodies have done enough to make people aware of their duties is another thing, according to Mr Agathangelou, who comments: "In the main, small employers have not been properly informed of the risks of fines and potential litigation.

The government is committed to making auto-enrolment as simple as possible and minimising burdens on employers.Government document

"The [Department for Work & Pensions'] Workie advertising is too soft and fluffy, in every sense."

Mr Peacock adds: "The Pensions Regulator must show some teeth and explain what needs to be done, by when, and leave employers in no doubt that if they do not comply, they will be fined."

Perhaps because of the complexity and lack of understanding, Mr Daems argues the need for collaboration is clear: "Complying successfully with auto-enrolment, in our experience, normally involves collaboration with an adviser, payroll bureau, any software being used, or an accountant and the employer."

New employers

It is worth mentioning that new employers setting up this year have been given a three-month grace period whereby they can postpone new workers joining the pension scheme. 

This was outlined in the government's six-page March document, Workplace Pensions Automatic Enrolment: Miscellaneous Regulations Package 2017.

The document states: "The government is committed to making auto-enrolment as simple as possible and minimising burdens on employers.

"Respondents broadly welcomed the proposed changes to the auto-enrolment duties trigger date for post-staging employers as a sensible solution to the issue of how best to apply the near-instantaneous auto-enrolment duties to new employers that come into existence during 2017.

"There was also considerable support for the deregulatory measure that will allow these new (post-staging) employers to defer auto-enrolment for their new workers by up to three months."

This was its response to the February consultation on auto-enrolment, which can be found in the government's auto-enrolment section of its website.

simoney.kyriakou@ft.com