Auto-Enrolment

Auto-Enrolment

Didn't find your answer?

I am getting the impression that a lot of small owner-managed businesses (especially those with no other employees) will want to opt out of AE because they aren't interested in pensions or they already have made other provisions, eg by making payments into a SIPP.

Is anyone aware of a minimum impact process by which a small employer can stay within the requirements of Auto-Enrolment but do an absolute minimum so that everyone opts out?

Captain

Replies (41)

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By 0098087
02nd May 2014 08:31

nest?

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By johngroganjga
02nd May 2014 08:44

I wouldn't have thought that a small owner-managed business, with no other employees, that already had a pension scheme in place, would have anything to do anyway.

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By Captainblack
02nd May 2014 08:54

Unfortunately it does
Because existing schemes like SIPPs do not count and indeed neither does Nest.

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By johngroganjga
02nd May 2014 09:06

Presumably you mean some existing schemes don't count.  If so, I am sure you are right.

And I thought that NEST was the default provider of auto-enrolment compliant schemes. How is it that a NEST scheme does not count?

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RLI
By lionofludesch
02nd May 2014 09:27

Two years away

With the earliest staging date for my employer clients being two years away, I'm the first to admit I've not done much beyond tell them that it's coming.

My understanding is that no insurance company will be bothered to set up a tailored scheme for my clients - max 16 employees.  So they'll be stuck with default schemes.  I've heard three names mentioned - NEST, Now Pensions, People's Pension.  I know nothing about them.

I imagine it'll be a bit like NIC - you register, you collect some wholly inadequate premium from the employee, you add some wholly inadequate contribution of your own and send it off to the pension scheme.

Correct me if I'm wrong - I will need to be knowing this in 12-18 months time and I'd be pleased to hear of others' experiences.

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Replying to lionofludesch:
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By JoeOBrien1983
02nd May 2014 09:31

Well, yes.

lionofludesch wrote:

With the earliest staging date for my employer clients being two years away, I'm the first to admit I've not done much beyond tell them that it's coming.

My understanding is that no insurance company will be bothered to set up a tailored scheme for my clients - max 16 employees.  So they'll be stuck with default schemes.  I've heard three names mentioned - NEST, Now Pensions, People's Pension.  I know nothing about them.

I imagine it'll be a bit like NIC - you register, you collect some wholly inadequate premium from the employee, you add some wholly inadequate contribution of your own and send it off to the pension scheme.

Correct me if I'm wrong - I will need to be knowing this in 12-18 months time and I'd be pleased to hear of others' experiences.

In a nutshell, yes.

But it's more complicated than that, it would be worth your while trying to get to a seminar somewhere that covers the topic. I would look into the three options you mentioned as well. But before that, you need to know what your clients will need to do, otherwise, you'll have no idea what to ask them to establish if their offering is suitable for your clients.

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Replying to bernard michael:
RLI
By lionofludesch
02nd May 2014 10:32

Helpful

JoeOBrien1983 wrote:

lionofludesch wrote:

With the earliest staging date for my employer clients being two years away, I'm the first to admit I've not done much beyond tell them that it's coming.

My understanding is that no insurance company will be bothered to set up a tailored scheme for my clients - max 16 employees.  So they'll be stuck with default schemes.  I've heard three names mentioned - NEST, Now Pensions, People's Pension.  I know nothing about them.

I imagine it'll be a bit like NIC - you register, you collect some wholly inadequate premium from the employee, you add some wholly inadequate contribution of your own and send it off to the pension scheme.

Correct me if I'm wrong - I will need to be knowing this in 12-18 months time and I'd be pleased to hear of others' experiences.

In a nutshell, yes.

But it's more complicated than that, it would be worth your while trying to get to a seminar somewhere that covers the topic. I would look into the three options you mentioned as well. But before that, you need to know what your clients will need to do, otherwise, you'll have no idea what to ask them to establish if their offering is suitable for your clients.

Thanks Joe.  That's helpful.

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By JoeOBrien1983
02nd May 2014 09:27

If...

...they are directors of the business, have no employees (at any time, even seasonally or casual) and have no employment contract themselves then Automatic Enrolment will not apply to them. They have no 'workers' and therefore no body to enrol, regardless of whether they have a SIPP or otherwise for themselves.

Of course NEST counts, that's it's primary function, to assist employer in dealing with Automatic Enrolment.

Existing 'Schemes' may be usable it depends on the pension scheme provider. A SIPP isn't a scheme, it's a personal pension.

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By Captainblack
02nd May 2014 10:23

Further comment on nest
I was reading that nest wasn't a solution here. http://www.creativeautoenrolment.co.uk/employers/
Frankly I don't know either way.

I am informed by Hargreaveas Lansdown that their SIPP can't be used as a scheme for AA.

Captain

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Replying to bendybod:
RLI
By lionofludesch
02nd May 2014 10:31

Not quite

Captainblack wrote:
I was reading that nest wasn't a solution here. http://www.creativeautoenrolment.co.uk/employers/ Frankly I don't know either way. Captain

That's not what it says.  It says NEST won't do the admin.  Which is not quite the same thing.

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The triggle is a distant cousin of the squonk (pictured)
By Triggle
02nd May 2014 11:02

The problems with the NEST scheme is that:

 - They don't do the admin (as Lion has said)

 - The current annual maximum contribution is currently set at £4,500

 - There is a ban on transferring a NEST pension into another pension (pension consolidation) should, for example, an employee change employers.

My worry is the mechanics of getting small employers into AE in the first place. I'm not an IFA so, presumably, I'm not even allowed to suggest NEST as a cheap option to clients as this would be giving investment advice.

Word on the street is that most IFAs wouldn't get out of bed to set up a NEST scheme for smaller employers. So where do I go from here?

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Replying to aland:
RLI
By lionofludesch
02nd May 2014 11:23

Government

Triggle wrote:

My worry is the mechanics of getting small employers into AE in the first place. I'm not an IFA so, presumably, I'm not even allowed to suggest NEST as a cheap option to clients as this would be giving investment advice.

Word on the street is that most IFAs wouldn't get out of bed to set up a NEST scheme for smaller employers. So where do I go from here?

Yep. Don't think the Government has thought that one through.  Unsurprisingly.

So what about Now and People's ?

Is not one of the problems that there's nothing in it from an investment point of view for the employer?  The people who will benefit financially are the employees who don't have a lot of say in the choice of scheme.   The employer is likely to choose the scheme which has least admin resistance.  Doesn't matter to him whether it makes any money.

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Replying to aland:
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By rjoconnor81
02nd May 2014 11:53

IFA

I have had exactly the same problem, not one IFA or pension provider is interested in any of the payroll clients we have.  I spoke to my IFA and he suggested writing to the clients to say that they need get a fund in place and we can't advise on this, but these are the three that we currently understand are the only funds being offered to employers of your size, but please seek independent financial advise.  They then call IFA to be told that they are not interested in the work, so hopefully they will then look towards NOW, People and NEST.  

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Replying to Alex_T:
RLI
By lionofludesch
02nd May 2014 12:30

Absolute *******

rjoconnor81 wrote:

...... but please seek independent financial advice.  They then call IFA to be told that they are not interested in the work .......

That's exactly the sort of ******* that over-regulation has produced.

How is that good for the punter ?

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By coops456
02nd May 2014 11:38

Eating your own dog food

We have brought our own staging date forward from 2017 and are in the process of enrolling with NEST. We did this to gain experience as it's important to know what your clients will go through.

Our largest client has just staged and chose NOW. I've not been particularly impressed with the latter, and want to see how NEST compares.

It's not offering investment advice to point out to your clients that small employers are not attractive to the traditional pension providers; I don't think I would be overstepping the mark if I went on to list the schemes that will more or less take anyone.

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By rjoconnor81
02nd May 2014 11:50

NOW and People & NEST

I have spoken to all three (well not NEST as no helpline - but have read the website).  From my point of view (not a financial advisor) People is by far the most flexible.  You can move pensions in, out, continue paying in when you leave employment (can't do that in NOW) and they have 7 funds for each employee to choose from (NOW only have one).  None of them do the admin automatically but do have template letters etc for you to send to employees etc etc.  Speak to PEOPLE and NOW, they are both very helpful.  

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By puzzel
02nd May 2014 12:25

friendly pensions

Had a meeting on Tuesday, still recovering from it.

only thing that stuck in my mind was the £75 pcm management charge (+vat), and then a % of the pension paid by employees.

They will do most of the admin by e-mail for the employee's opt in and out.

But just could not get a straight answer as to their processing time!

I.E process payroll on a Tue to be paid on Wed in respect of RTI

So upload payroll values on Tue to pension provider to assess pension contribution to be deducted, so how long do we wait to get these values back.

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Replying to lionofludesch:
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By PuddlePayroll
07th May 2014 21:08

AE hokey pokey

puzzel wrote:

But just could not get a straight answer as to their processing time!

I.E process payroll on a Tue to be paid on Wed in respect of RTI

So upload payroll values on Tue to pension provider to assess pension contribution to be deducted, so how long do we wait to get these values back.

 

This is the interesting one and no one can answer except the employer as it will depend on process. We helped stage a large (ish) retailer last year.

Their payroll process involved getting to a point of gross to net pay at around midday on BACS day and sending it by 4pm. 

We looked at a hub that the pension provider offered where you upload your file, it does the assessment, emails employee or gives you the letters as a pdf, gives you the deductions to make which you must then load into payroll before running your final payroll to run.

Alternatively the payroll system can handle the complete assessment and produce a csv file for mail merging letters (which you can tailor unlike the providers hub) and you can get on with your day.

Payroll do hold the key on the complete process.

For most employers contractually enrolling from day 1 may be a worthwhile option to get rid of any admin in terms of postponement, assessment and enrolment admin!

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By budgep1
02nd May 2014 12:36

NEST for Accountants
Lots of interesting comments here. Automatic Enrolment is new legislation which requires all employers to be compliant. NEST is a Qualifying Workplace Pension scheme, free to employers and open to any UK employer and their workers should they wish to use us.

To find out how this impacts you and your clients we have run a series of webinars and events (specifically focusing on accountants) which you can find on http://www.nestpensions.org.uk/schemeweb/NestWeb/public/aboutUs/contents...

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Replying to dfens:
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By puzzel
02nd May 2014 12:46

Nest may not be the best

budgep1 wrote:
Lots of interesting comments here. Automatic Enrolment is new legislation which requires all employers to be compliant. NEST is a Qualifying Workplace Pension scheme, free to employers and open to any UK employer and their workers should they wish to use us. To find out how this impacts you and your clients we have run a series of webinars and events (specifically focusing on accountants) which you can find on http://www.nestpensions.org.uk/schemeweb/NestWeb/public/aboutUs/contents...

HOWEVER

The admin will fall on the employer and in most cases slung back to the person completing the payroll, as NEST do not do this.

And what about when an employee wants to move his pension contribution, no can do.

What NEST might be good for is where all employers are required to have AE in place and that the employees all want to opt out. No fees are payable, just a review every 3 years.

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Replying to Accounting4Life:
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By budgep1
02nd May 2014 13:51

It is true that employers are responsible to comply with the new legislation and as with many other processes the employer has to make a decision whether they do it themselves or look to outsource it – just like the payroll process. At NEST we reached out to and engaged with the payroll software industry, and there are payroll software providers who are able to produce files compatible with NEST (and other providers). If not, we have example templates, a payroll guide and file utility to help get the right data, in the right format and make it is easier for employers. We also, have a facility whereby third parties can have delegated authority and help their clients to set up and run a NEST account. In just over 12 months 1million workers have joined the scheme with an opt out rate less than 10%. Our research tells us workers want a safe place to invest and want to save for their retirement. Individual members can pay more into their account with NEST via their own bank account - and many do.

  

It is true that employers are responsible to comply with the new legislation and as with many other processes the employer has to make a decision whether they do it themselves or look to outsource it – just like the payroll process. At NEST we reached out to and engaged with the payroll software industry, and there are payroll software providers who are able to produce files compatible with NEST (and other providers). If not, we have example templates, a payroll guide and file utility to help get the right data, in the right format and make it is easier for employers. We also, have a facility whereby third parties (e.g. accountants) can have delegated authority and help their clients to set up and run a NEST account. In just over 12 months 1million workers have joined the scheme with an opt out rate less than 10%. Our research tells us workers want a safe place to invest and want to save for their retirement. Individual members can pay more into their account with NEST via their own bank account - and many do.

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By Captainblack
02nd May 2014 13:18

Very helpful

Joe

quote: ...." they are directors of the business, have no employees (at any time, even seasonally or casual) and have no employment contract themselves then Automatic Enrolment will not apply to them. They have no 'workers' and therefore no body to enrol, regardless of whether they have a SIPP or otherwise for themselves."

This is very helpful, I was not aware of this. Thanks.

Captain

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By Captainblack
05th May 2014 11:44

Further Question!

Joe said:-

quote: ...." they are directors of the business, have no employees (at any time, even seasonally or casual) and have no employment contract themselves then Automatic Enrolment will not apply to them. They have no 'workers' and therefore no body to enrol, regardless of whether they have a SIPP or otherwise for themselves."

-------------------

I looked at notes 29 and 30 in this (simple!) document http://www.thepensionsregulator.gov.uk/docs/detailed-guidance-1.pdf which seem to cover this point to some extent.

But my example is slightly dfferent. In my example a limited company has:-

2 shareholders each of which are Directors and 1 other Director.

There are no other employees.

None of the three Directors has a contract of employment.

Can anyone say whether Auto-Enrollment would apply to this company?

Many thanks

Captain

 

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By JoeOBrien1983
06th May 2014 09:35

It's about 'workers'. Do they have any workers. Somebody is a worker if they meet both of the following criteria;

- The individual is employed by the company under a contract of employment, and;- At least one other person is also employed by the company under the terms of a contract of employment  Since the three directors have no contracts of employment or indeed employees, then Automatic Enrolment will not apply.   

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By Captainblack
06th May 2014 09:49

Many Thanks

Joe

Many thanks for this, I was hoping this was the case. There are indeed no other employees.

So I guess they need do nothing about Auto-Enrollment, and can ignore it.

Captain

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By Philip950
06th May 2014 10:38

Director only companies and auto enrolment

If I can expand Joe’s answer to your specific query as the auto enrolment law is potentially complex in this area.

First, if there are no ‘workers’, there is no auto enrolment requirement. A ‘worker’ is a similar definition as in employment law i.e. it is wider than employee. The function of the wider definition is to give some employment rights to people who would not otherwise have such rights. An example is the right to the National Minimum Wage. Another example is auto enrolment.

An office-holder, such as a director is not a worker. An office-holder has no contract or service agreement in relation to that appointment. It may however be the case that an individual also has a contract of service and will therefore be a worker. This is where the problems potentially arise if the director carries out a wide range of activities. Do they have an implied contract of service? Some of you may remember the fuss we had about this when the National Minimum Wage was introduced in 1999. The upshot of correspondence between the ICAEW and the Department of Trade and Industry at that time was – to quote from the correspondence:

‘The DTI have told us that if there is no written employment contract or other evidence of an intention to create an employer/worker relationship they will not seek to contend that there is an unwritten or implied employment relationship between a director and his company.’

So to answer your question, theoretically auto enrolment could apply but, in practice, I would expect The Pensions Regulator to take the same line as the DTI took in 1999. They will have enough on their plate without worrying about director only companies.

There other part of the auto enrolment law which can apply to this situation is a specific exemption for one man companies. If an individual is the only person in a company of which they are also a director, the employer duties do not apply even if there is an employment contract.

I’ve been reading with interest the other comments in this thread about the practical problems clients will face with auto enrolment and in particular can you tell your clients about the ‘friendly’ pension schemes. Of course you can. You are just giving information about the existence of these schemes. And you can do a few other things as well. I work for Mercia and you can read our view of how you can help at:

http://blog.mercia-group.co.uk/2014/02/28/how-do-we-help-your-clients-with-auto-enrolment-by-phil-williams/

 

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By zebaa
06th May 2014 10:53

There are other pension providers.

But you need to look. There are all sorts of ways to do this, but - and this is the point - you need to look around. Pensions, in essence, is a simple idea: a percentage of earnings is invested throughout a working life for repayment in retirement. The more that is put in the greater the retirement benefit.

To expand a little further. Group schemes, with some flavour of DB, may offer greater benefits than Pension company DC schemes, but may be industry based. Yes, charges do matter. Without giving any investment advice you should understand the difference between DB & DC also low cost passive tracker funds & higher cost managed ones.

It will be the employers decision who they choose, but the basic rule - more in, more out, is a basis on which to start. It just depends on what they are looking for.

Pensions companies are gearing up and there will be a lot of information heading the way of employers. My suggestion is you start looking at it, just do not offer investment advice.

EDIT: Ha it took me to long to type. Very much agree with Phillip.

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By Captainblack
06th May 2014 10:53

Beginning to wish I hadn't asked!

Firstly, thank you to everyone who has taken the time to respond.

My overwhelming reaction is to marvel at the complexity of the proposed model that somebody has dreamt up. The lack of understanding about what's in the pipeline for small companies makes RTI look trivial by comparison. I do wonder how a lot of small businesses will cope.

Oh well, onwards. Thanks again.

Captain

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By Irishdaz
07th May 2014 12:23

are they workers?

It is clear that some of you have a better understanding than others, but it isn't helped by the relatively vague legislation! A company with 2 directors is likely to need an AE scheme, even if they have no contract of employment. If they provide knowledge or services to the business, without which it would fail, then they may be deemed "workers"

The only situation that IS clear is where a single person creates a "one man band" business, who is probably exempt from AE unless they change the rules). If they then bring the Spouse into the business as a Director they will probably need an AE solution.

NEST & opt out in favour of existing provision is most likely to work, but they still have to maintain an AE option. This includes the regular employee assessments at each pay cycle (pointless exercise), the offer to opt in every 12 months, and the AUTO enrolment again every 3rd year. All communications, letters to eligible staff etc. must still be maintained & held on file. NEST allows all of this, but is very much a DIY set up.

REMEMBER they must actually be enrolled and then use the prescribed Opt out route.

The options for 3 or more staff begin to look a bit better, with NOW! and Peoples Pension offering relatively simple options. In answer to the issue that NOW! only offering one fund this is not as much an issue as you might think. In many years experience as an IFA in this market I have found most people accept the default fund choice, and then never change anyway.

For 5 or more staff the options increase further, and a good quality, low cost scheme, can be arranged that benefits both staff & employer.

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Replying to DJKL:
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By JoeOBrien1983
07th May 2014 15:22

I disagree

Irishdaz wrote:

A company with 2 directors is likely to need an AE scheme, even if they have no contract of employment. If they provide knowledge or services to the business, without which it would fail, then they may be deemed "workers"

'May' being the key word in that sentence. 'In very rare circumstances' would have been better. Additionally, most businesses would fail without their director. It doesn't make all directors workers for ae.

The only occasion where a company with no employees, no contract of employment and only two directors would ever need to enrol the directors is if one director was actually under a contract of service to the other director i.e.

- mutual obligation – an obligation for the individual to work for the employer and an obligation on the employer to provide work (or to pay for the individual to be available to work); 

- control – a business having a significant degree of control over the individual (i.e. the business deciding what work is done, the way it is done, the means employed in doing it, and the time and place where it is done); 

the nature of the service provided – an individual providing personal service, rather than having the right to provide a substitute; 

- remuneration – usually a fixed wage or salary, as opposed to a fixed fee for a specific project, or an hourly or daily rate paid on provision of an invoice;

- financial risk – no financial risk or opportunity for profit. A self-employed contractor tends to take on some financial risk in providing services or to have the opportunity for greater profit by their own management of the contract

 

As mentioned earlier, this is a vast topic. To cover every question with the detail it deserves would make my working day unprofitable. 

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By Irishdaz
07th May 2014 12:40

Schemes

Joe mentioned a 16 man scheme not being of interest to providers or IFAs, I can only say that you were speaking to the wrong IFA then! Many providers, and many IFAs are interested in helping you through this

I recently set up an AE compliant scheme for 10 people. It offers a wide choice of investments, low fund charges, no cost to employer other than contributions, and a robust AE solution to simplify communications etc.

The employer was offered a clear fee structure for our services, and chose to opt for us to present the scheme to his staff, encouraging take up. All staff were then offered personal advice. Our fees will be in line with the level of scheme & assistance required by the employer, as I know most IFAs in this market are charging

There is no monthly fee for the scheme (as with some providers), so the employer knows the ongoing costs are just the fixed contribution levels.

I would urge you all to encourage your small business clients (2 to 30 employees perhaps) to look into their options well before they get their "12 month to Staging date" reminder. This is because if they wait until later there will be such an avalanche of companies needing help the IFAs won't be able to find enough time to help. This will lead to lots of default NEST schemes, just because there will be no other option. In one month next year over 100,000 companies hit the Staging date!

If they start sooner they can work the cost into their future budgets too. Imagine a small employer considering a 2% pa pay rise each year for 4 years. If we phase their AE in, we can do 1% pay rise, 1% pension increase each year. In 4 years the staff pay increases by 4% and you are on 4% employer contribution, and therefore compliant with AE. Total salary bill increases by 8% approx.) If you wait 4 years, and the staff are earning about 8% more, you'll need to find another 4.3% approx. (108% x 4%) on top for pensions.

Any schemes you can't place through an IFA I would be happy to discuss!

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By Captainblack
07th May 2014 12:40

The problem is that none of the 3 people in this example have the slightest interest in a new pension scheme, they already contribute (via the company) to SIPPs. What a waste of time it all is!

Captain

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7om
By Tom 7000
07th May 2014 14:32

Things to consider ( in my opinion)

 

1) Can we charge the clients for advising them...no...because we are not authorised IFA's

2) Can we advise the client ( for free)  on either of the 3 schemes or indeed any others...No becaiuse we are not IFA's

So If you are a member of an institute and you dont have the right stamp on your membership card expect a word in your ear from the regulation department

What can you do...just point them at the rules and tell them they need to comply

http://www.thepensionsregulator.gov.uk/automatic-enrolment.aspx

Your hands are tied...

 

You really dont want them coming back to you in 10 years saying I want to move my pension from Nest and its not allowed and its all your fault...or some other such claim.

But then....

 

What do I know

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By Niall Ferguson
07th May 2014 14:48

Sole Director and Spouse and

As others have commented sole directors are outwith any obligation.

This then raises the question of what happens if their spouse works for them in a capacity of P/T book-keeper, and is paid a salary of under £10,000 or even under £5772.

It is key as to how this individual is represented, and there may be a good rationale for them to take on a role of Company Secretary, thereby becoming an officer, with removal of any links to being contracted to work as a jobholder. This would negate the companies obligations under AE, as even if they earned under £5772, as a book-keeper, this would  potentially bring both parties into the frame.

As a reference to other points flagged under this post:-

As one of the BIG 3 already mentioned, we're keen to support payroll bureaux with process optimisation, and happy to catch up with you on any experiences that are challenging.

Unlike People's and Nest,  NOW: can support full administration routines, but generally view that assessment is best managed within payroll software, as this is where data is held.

Modular elements that we can switch on/off to suit your preferred model:-

~ Assessment/ Categorisation of workers

~ Fully managed communication programme - via emails at no charge (hard copy @ low cost)

~ Provide pre-member/ member UK telephone helpline for worker queries

~ Provide opt out routes via Internet/ Telephone options/ Manual forms

- Full data management and record keeping facility for TPR reporting and re-enrolment

- Unique dedicated microsite for the bureau to manage all clients, and care-take those who don't sign up to your "managed service" solution, to enable bureau to track clients struggling

WE MAKE NO EXPLICIT CHARGES TO THE EMPLOYER - except for hard copy postage.

 

 

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By andypfd
07th May 2014 15:02

AE Schemes

Lots of interesting comment on this.  One of the links suggests 90% of AE compliance is about payroll and not pensions and broadly I'd agree with that.  Whilst employers may not be interested in pensions per se, they should be interested in compliance with employment legislation which is where AE really sits.  At their staging date, some 33 new employer responsibilities land on their desk.  Only one of these is to have in place a qualifying pension scheme!  The biggest challenge by far will be consistent ongoing assessment of the workforce at each payroll period (not just at the staging date) and management of the associated communications.  Alongside this, there will be the need to respond to information requests from the workers, which must be done in a manner that does not constitute inducement..

For clarity, I am an IFA and a quick summary of the situation so far is that the large employers have been staged to date. They've basically had "in-house" resources to deal with this on a dedicated basis, so not much problem there although a few have ignored their responsibilities or left it too late. This year is all about mid size employers with 50-250 employees. Early indications seem to be that they are leaning towards consultancy driven solutions providing integration between payroll and the pension scheme. No doubt many will leave it late however. Moving forwards, my prediction is that once the staging moves to small employers, it is likely to swing more and more towards a self-service facility whereby some will seek to do it all themselves (good luck!); some will use "sticky tape" solutions, e.g. handle the assessment side (with some communication support) through Payroll, e.g. Sage 50 and then manipulate that data across to a pension provider, probably with portal access - workable, although as someone suggested above, the problem is working out which providers will be remotely interested in taking volumes of small schemes in a couple of years time. The last option will be to rent an "end to end" solution - almost certainly the most costly in terms of money going out the door but equally, almost certainly the simplest option from the employer's perspective. It'll be for them to determine the cost v benefits value between the latter 2 options..

 

Lastly, it's suggested in some of the comments that IFAs are not interested in this. I couldn't disagree more, although I accept that a large number of IFAs have made a conscious decision not to participate because they do not see this as an area in which they have sufficient expertise. For those that have chosen to participate, IFAs operate on a fee basis only these days and so the size of the client in that regard is irrelevant, its all about profitability. The biggest issue for small employers requiring advice will be gaining access to that advice when they need it simply because of lack of capacity. I can only really see the price going up as demand starts to outstrip supply over the next 3 years, so smaller employers may be well advised to find and engage an advisor sooner rather than later so that they're first in the queue.

 

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Replying to Tax Dragon:
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By Huw Williams
08th May 2014 11:21

Its all about the admin

andypfd wrote:

...  At their staging date, some 33 new employer responsibilities land on their desk.  Only one of these is to have in place a qualifying pension scheme!  The biggest challenge by far will be consistent ongoing assessment of the workforce at each payroll period (not just at the staging date) and management of the associated communications.  ...

 

 

Before I retired, I had a look at this and my view was that the admin could be a nightmare for small employers.  This is the area that I think accountants will need to get to grips with.  IFAs can help with chosing a suitable pension scheme (including NEST), but it is the week in week out admin  - deciding what sort of an employee you have (each time you run the payroll) and whether they need to be in the scheme (which they can opt out of), or could opt into the scheme, or are not eligible (and will need to be told they are not in) and making sure you send them the right letters at the right time - enrolling employees and then re-enrolling them even after they have opted out and....

 

I started thinking about setting up a specialist business to cope with this and then remembered what retirement meant!

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By Liz Clough
07th May 2014 15:50

Auto enrolment

It sounds to me like a lot of people need to get on some courses. Some of the comments here are completely inaccurate!

Anyone with a PAYE Scheme MUST auto enrol. Owner managed businesses can write to the Pensions Regulator and request that the business be exempted.

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By JoeOBrien1983
07th May 2014 16:28

That's correct

PAYE schemes all have a staging date. They must either register a scheme with the pensions regulator within 5 calendar months of their staging date or inform the pension regulator (TPR) that the legislation does not apply to them.

Anyone without a PAYE scheme is automatically 1st April 2017, with certain exceptions.

It's also worth highlighting that this is how the TPR know who to contact for non compliance. Which can result in a fine.

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By North East Accountant
08th May 2014 09:17

Do you need an IFA?
There is a lot of talk about needing IFA's etc.

We have met with a few IFA's regarding AE and at least 2 have set up a separate company to deal with AE. They have both stated that as AE is non regulated they do not need to be FCA regulated for AE.

They stated that they only need the FCA registration for investment advice.

As AE is non regulated surely an employer can deal with all matters (as long as they clearly state that they are not giving investment advice)without an IFA.

Do you need an IFA?

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Replying to Accountant A:
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By JoeOBrien1983
08th May 2014 09:47

...

North East Accountant wrote:
There is a lot of talk about needing IFA's etc. We have met with a few IFA's regarding AE and at least 2 have set up a separate company to deal with AE. They have both stated that as AE is non regulated they do not need to be FCA regulated for AE. They stated that they only need the FCA registration for investment advice. As AE is non regulated surely an employer can deal with all matters (as long as they clearly state that they are not giving investment advice)without an IFA. Do you need an IFA?

No corporate advice isn't regulated. So technically anyone could do it, that's the truth. You can't advise Mr Smith what to do with his £5,000 ISA contribution but you can recommend a company to set up a new scheme with any provider you want and get them to transfer millions in assets under management. That's the ridiculous situation that the government has created. 

But then again, most Corporate advisers are registered, are experienced, do know what the legislation entails and the best way to deal with it. Anybody can search an IFA on the FCA website to see if they are registered.

Nobody needs advice. They can do what they want. But in order to do it right, they need advice.

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By JoeOBrien1983
08th May 2014 09:22

Yes

The issue with contractual enrolment is that if the employee opts to cancel the plan within the 30 day cancellation period they are deemed as never having been in a qualifying workplace pension scheme and must then be enrolled if eligible. So you will still need procedures in place, communications for those that are assessed and processes for those that opt out as they could opt out after being enrolled etc. 

The client can opt to use postponement for those people i.e. Monthly paid would be beginning of next pay reference period plus two months. So you delay the assessment. 

They looked at stopping this 'double opt out' issue in the October review last year, however decided to leave it in place.

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