View more on these topics

Anthony Carty: The goalposts have changed on auto-enrolment

Changing terms from pension providers and the looming capacity crunch means advisers need to get to grips with auto-enrolment as soon as possible.

Anthony-Carty-MM-Peach-700.jpg

Let me state right up front that any initiative which means more savings that can reward the employees of UK SMEs in their retirement has to be positive news. However, in the past few months, the game has changed for auto-enrolment in a way that could have serious implications for business owners and advisors alike.

We are now one year in to auto-enrolment and without doubt it has met with a positive response. More than 1.6 million employees have already signed-up to auto-enrolment company pension schemes since its launch.

Clearly the big corporates have done well in communicating the benefits to their staff. Now it’s the turn of the SMEs as the staging dates for smaller companies loom large and they are turning to their advisors for help.

One aspect of auto-enrolment is very clear: auto-enrolment is not about pensions, it is about compliance. For those advisors who have already worked this out, the past few months and the immediate horizon is filled with planning for implementation with their clients. However, a very serious shock awaits those who believe that, having established an employee pension scheme for their clients in the past, the process of changing this over to an auto-enrolment system will be straightforward.

The game has changed and pension providers in particular have moved the goalposts. Some, such as Scottish Life, have quite openly declared that without a minimum of six months’ notice ahead of company staging dates, they will not accept any auto-enrolment business from new or existing customers, unless stringent criteria are met.

Legal and General has also declared a similar position, although it is more coy about the cut-off date.

And it is not just the pension providers. A critical element in the auto-enrolment implementation process is middleware – the software that provides the vital link between payroll and pension. Now, even the likes of auto-enrolment guru and founder of cloud based Jargon Free Benefits Steve Bee has stated that it will not be able to deal with new business without at least four months’ notice.

The administration and compliance elements of auto-enrolment are not easy and it is not a simple matter of transferring an existing scheme over to the new regime. Now, with more than 95 per cent of the UK’s business economy comprising SMEs, many with fewer than 50 employees and staging dates starting from April 2015, a capacity crunch is imminent.

Whether a company has 10 employees or 1,000, the steps to implementing auto-enrolment are more or less the same. The biggest challenge is ensuring compliant interaction between payroll and the pension scheme and this is not, necessarily, an area of expertise for many IFAs or business advisors.

There are a limited number of expert resources in the UK. With hundreds of thousands of small businesses facing the same situation, there is already clear evidence that these resources are coming under pressure to help business owners – and their advisors – plan and implement the auto-enrolment process. Clearly the pension providers are aware of this too.

The game has changed for auto-enrolment and advisors now need to be ahead of the game or face the consequences.

Anthony Carty is group financial planning director at Clifton Wealth

Recommended

House-Market-Mortgage-Property-700.png

Lenders are caught between unrealistic borrower expectation and tighter regulation

Since the global financial crash in 2008 the economic, political and social climate of the UK has changed dramatically. The financial crisis has changed the face of banking, bringing increased regulation and better customer understanding of the financial environment. In addition to widely expressed negative views of banks from the public, politicians and press, attributing […]

Technology-Tech-Currency-Money-700x450.jpg

Pershing to launch electronic re-reg service

Pershing is to offer electronic re-registration services for its UK clients as part of the wider industry shift to move clients’ assets between platforms more efficiently. The system has been tested with technology firm Altus and internally at Pershing’s parent company BNY Mellon. Pershing estimates it will begin a phased rollout of the service around […]

Holly-Mackay-2013-700x450.jpg
2

D2C platform surge fuelled by bank advice exits

The direct to consumer platform market has been boosted by clients who used to be served by bank advisers, according to The Platforum. Speaking at a Tisa event on platforms in London this week, managing director Holly Mackay said anecdotal evidence from D2C platforms indicated they were seeing most of their new client uptake coming from […]

India rate cut – more to come?

Kunal Desai, Head of Indian Equities at Neptune Investment Management India’s stockmarket rallied this week following news that the central bank was cutting interest rates more aggressively than expected. Commenting on the rate cuts and what this means for India’s economic growth, Kunal Desai notes that there were two important details in the announcement that have […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com