Pension providers, accountants, payroll professionals and financial advisers have known from the outset that auto enrolment is a huge challenge. But, all too often it has come as a painful surprise to employers.
Experience has taught us that making the process as pain free as possible for employers is best achieved when all links in the auto enrolment chain work seamlessly together.
Research we conducted with over 200 small and micro firms in October 2015 revealed 63% of small employers would not describe themselves as confident when it comes to handling the administration of their pension scheme. Amongst micro employers, this jumps to 72%.
The importance of payroll bureaux
Nearly two thirds of small employers and 58% of micro employers already pay for accountancy services and in our experience, payroll bureaux add huge value for both employers and pension providers around auto enrolment. They handle much of the processing work, which can be complex and deal with many of the day to day administration queries.
In 2015 NOW: Pensions provided payroll bureaux with microsites within which they can efficiently manage multiple clients’ auto enrolment processes. Our experience has been that traffic to our client support centre from employers supported by a payroll bureaux was 90% lower in 2015 than those not using bureau services.
During the second half of 2015, the percentage of employers signing up to NOW: Pensions using payroll bureau services was in the region of 60%. It’s therefore clear that employers using payroll bureaux should pay a significantly reduced monthly service charge than those that come to us direct in light of the significant role bureaux play.
Communication between employer and pension providers
Contrary to popular belief, by no means all employer contact with pension providers is during the month of staging and implementation. Yes, that is the time of most common need, but there is significant ongoing help required by many employers. During Q3 2015, for all employers that staged with us in 2015, the timing of requests for help came to us as follows:
- Pre staging date: 14%
- During month of staging: 30%
- During postponement period: 33%
- During “business as usual”: 23%
How accountancy and payroll bureau firms and financial advisers are supplementing each other
We are finding that the financial advisers who are really making auto enrolment work for their clients and their own businesses are those who are ensuring their employers have access to professionals who can do the auto enrolment processing work for them. In most cases those professionals are payroll staff within accountancy and/or payroll bureau firms.
We also find that most accountancy and payroll bureau firms are very open to working with advisers. Most do not want to be managing client auto enrolment projects pre staging and they certainly do not want to be dragged into providing post staging pension advice and ongoing pension regulation updates etc. There may not be scope for large fee charging opportunities at the time of auto enrolment staging, but there are massive opportunities to increase and deepen accountancy relationships. We are seeing very successful models where advisers are charging payroll bureaux fees for setting up schemes and managing ongoing pension related employer business and queries.
My top tip for advisers to maximise the opportunities presented by auto enrolment for SME and micro employers is to work very closely with local accountancy firms that run payroll services:
- Refer your clients to them for auto enrolment processing – they will receive a much smoother, joined up and stress free experience
- In the vast majority of cases the costs will be less to their businesses than if they go it alone
- You will significantly develop your accountancy relationships and the potential for ongoing new client business
- You can develop new ongoing income streams working in partnership with local accountancy/payroll bureaux connections. They may pay you a modest fee per client – they can absorb and/or pass it on within their overall payroll monthly client charges
By working with us and your local accountancy firms you can give your clients the complete auto enrolment service and can access our discounted bureau charge. The monthly employer charge if they come to us direct is £36.00 + VAT; if they come to us via a payroll bureau using our microsite service the charge is just £20.00 + VAT or £12.50 + VAT if they have four or fewer employees. We continue to welcome all employers and handle all communications.
Research we recently conducted revealed that for both small and micro clients having a provider that handled all statutory communications was high on the priority list. This was deemed essential or important by 65% of small firms and 66% of micro firms so shouldn’t be under-estimated.
Martin Olive is Strategic Partnership Manager at NOW: Pensions