Last week we had another round of consultation on some of the auto enrolment problem areas that have been highlighted since the legislation was put in place.
This consultation seems to pivot on the problems of the payroll providers who were suffering from RTI (Real Time Initiative) blindness and now find out that the reference periods they use are different from those intended to determine who had to be auto enrolled.
If it goes ahead we will have some on one reference period system and others on the newer version. Having scanned the paper I failed to find any clue as to what you do when two companies merge or one takes over another. Is there any transition? This, by the way, is more simplification yet it will only take effect from April 2014 and those who reach staging before then will need to comply with the old rules.
Sometimes its best to leave things alone and ignore the lobby of the unprepared providers who will still miss deadlines no matter what changes.
Employers I have spoken to recently seem to understand what is required to a greater degree than some advisers; if you think that auto enrolment is about pensions you have lost the plot. The employers recognise that it is all about compliance, with the closest parallel being Health and Safety rules.
This brings the noise over consultancy charging into sharp focus. From where I sit the sooner we accept that it cannot work for auto enrolment the better. I don’t say this based on the recent research from Which?; this was a survey of decency limits and demonstrated that providers are not in a position to police this now or in the future.
Auto enrolment is an opportunity if you take the time to take the employer’s perspective, the one that matters if you intend to charge fees.
While on the subject of intervention, the seemingly endless saga of a prospective ban (or not) on rebates be they cash or unit had clearly got stuck in the too difficult pile at the FSA. Then, dare I suggest it, they called up HM Revenue & Customs who did the business for them by making the rebates taxable. How else could the tax boys have dreamed up such a hare brained scheme?
Imagine trying to explain it to a client and how many more would be dragged into self-assessment? For the bit being taxed at source it is another costly task for the providers. So let’s just ban it and save all this hassle: a FSA/HMRC production if ever I saw one.
Many suggest that rebates keep costs lower. In reality, the only thing that reduces costs is transparency and simple reporting no I don’t mean KIIDs either, another waste of paper which fails to inform.
These are not the reflections of a grumpy old man but one someone who would like to move to a simpler way to work where analysis is straight forward and not frustrated by continual obfuscation and where comprehension is not the key objective.
So in both cases simplicity is the key; if the FSA has simply banned rebates we could have saved so much time and money. With Auto Enrolment we are in the same territory when indecision delivers cost and confusion but precious little else.
Rob Reid is managing director of Syndaxi Chartered Financial Planners