Pensions Automatic Enrolment – what should you be doing for your SME clients? By Phil Williams

  • Phil Williams
  • 26 June 2013 00:00

In May, I wrote a blog about the impending Tsunami of SME employers descending upon their accountants in the search for advice on the advent of Pensions Automatic Enrolment (AE). I included a short poll at the end of the piece asking for your views on some matters and I'm pleased to report that 25 people responded. That's 20 more than I thought would reply so thank you.

All but one person considered their firm should be providing an AE service to their clients and nearly everyone agreed that software would not provide all the solutions for a client employer. I asked for views on the extent to which payroll software will meet five key tasks required for the administration of AE. The percentages of respondents who considered payroll software would cope with each of the five tasks were:

· correctly classifying employees10%
· sending the right letters to the right employees at the right time about AE5%
· deducting the correct contributions from pay55%
· submitting contributions to the pension scheme within strict time limits8%
· keeping the correct records.21%

I agree with the majority who considered that payroll software would make the correct deductions and I agree with the overwhelming majority who thought that the software would do little else. So, accountants have a bit of a task on their hands.

All but one of the poll responses considered their staff would need training and that a procedures manual would be of benefit in providing an AE service. We, in Mercia, are currently considering a number of options including the provision of training courses based around a procedures manual. The combination of these two things should achieve the objective of allowing a firm of accountants to provide an AE service to their clients. We haven't decided yet but we will keep you posted.

May I make one further point to those accountants who think AE is an area where others should provide the service to their clients. It's about pensions after all isn't it and we don't give financial advice on pension schemes? The problem with that view is that AE has little to do with pensions. This seems a surprising statement to make but a spokesperson for the Department of Work and Pensions said last month:

'Auto-enrolment has been specifically designed so that employers do not need to seek advice when choosing a scheme.'

So the easy bit for an employer would seem to be choosing the right scheme for his or her employees. What the spokesperson didn't comment on was the difficult bits for an employer which are:

  • the letters and forms that need to be given to their employees and at the right time, and
  • the subsequent processes that the employer will have to comply with every payday from their Staging Date onwards.

Are we going to let our clients sink or shall we help them swim?

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