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A Chocolate teapot
Fan as I am of your outreach, your work on a common data standard and your website, I do not think that the quick guide to scheme selection is of much more value than a chocolate tea-pot!
The incidence of the purchasers of workplace pensions being members is already high and is likely to get higher. But is there a risk?
Owners of companies have to pay themselves , set up their own paye scheme and arrange all kinds of benefits for themselves as well as their staff. It is daft to suppose that the pension is some kind of mystery item that has to be treated with such care!
I would say that there is a risk of decisions being taken out of ignorance and that the impact of poor pension selection is going to be felt for many years to come.
We need regulatory permissions to do good work. We have spoken with the Institute and Faculty of Actuaries who regulate First Actuarial (the advisers to www.pensionplaypen.com). They have stated that we can provide allow non-regulated individuals and regulated individuals working in a non-regulated individuals to use our website to help employers choose a pension. They refer us to your statement in March.
The statement the FCA and tPR put out a in March was perfectly clear, it stated that when advising an employer about a workplace pension, that advice was unregulated, when advising an employee about participation in such a scheme, that advice was regulated. Employers know the difference, accountants and book-keepers know the difference and IFAs know the difference.
So these qualifications from yourselves are simply muddying the waters.
It's time that tPR and FCA and people like me who want people to pay attention to the pension, got together so that accountants, employers and advisers can move forward into 2015 collaboratively. That is the spirit of Friends of Auto-Enrolment, No one gets left behind and indeed the Pension Playpen.
I have been to the DWP to ask their opinion and speaking with a senior civil servant , there was no doubt that advising the employer was an unregulated activity. I was advised to press on with our work.
Pension Playpen will continue to offer help to accountants, employers and indeed IFAs as it currently does, we have skill and knowledge and know how to advise on a business to business basis.
A year ago, the OFT remarked that the by side for workplace pensions was among the weakest it had encountered, how will we engage ,educate and empower employers to choose good pensions unless we can do so without fear of some ill-defined regulatory threat?
No one disputes the regulators statement in March
Henry,
I do not think that anyone, including Neil, disputes the statement that was issued in March is true. Selection of a pension scheme for an employer is an unregulated activity and as such, in theory, anyone can provide this service.
I think the detail that followed was the issue for most in that, from my understanding, the same body also said that they would expect this service to be provided by someone who has the relevant skill, knowledge and experience.
Playpen and First Actuarial are a first class firm who clearly demonstrate that they have the relevant knowledge etc to provide this service. I would beg the question, "who else would we put on that list?"
Many who grace these pages with their thoughts will sit on that list I am sure but not all professionals associated with this area understand the impact of RDR on charges and commission (this was apparent in a recent article and its follow up comments). RDR changes have been far reaching in terms of perception and actual product provision.
How many understand the charging cap which will come into being in April of next year for all QWPS's?
How many are still calling this the NEST legislation?
You yourself still quote a well known BBC newsreader who thought that NEST was the only flavour and this a well educated and well informed individual.
Not all are wanting to stray into this area for all of these reasons and as such the selection and journey will be better for the involvement of people who do have this skill, knowledge and experience. This is not every accountant.This is not every adviser in fact. This is not everyone in payroll.
I think that we can rest assured that the regulator is happy for this to happen where an audit trail of why the recommendation was made exists. My concern is that some will align themselves with one pension provider for all of their clients because its easy and because that provider has done a great sales job on the firm concerned. That firm may not know the full picture and will believe all they hear, why wouldn't they....this is already starting to happen. Employers and employees will suffer en mass because of this and I would not want the regulators statement outlining a lack or regulation to mean that anyone can do this because I do not think that they actually...practically ...can!
I'm one of many accountants scratching their heads with AE
Firstly, I'm puzzled why such a complex and costly system for administering workplace pensions for small employers was adopted in the first place.
The article says that a quarter of employers planned to ask their accountant for help with AE. That may be true for large employers, but the figure for small / micro employers is likely to be closer to 90%.
The trouble is, I don't know anything about AE, other than it's a lot of hassle, with a lot of paperwork, that will hit my first client in about 2 years time. I don't know whether my software will do everything that AE requires or whether to even get out of payroll altogether.
One thing I know is that I definitely don't want to get involved in giving financial advice to employers about which scheme to choose. The problem is there won't be enough IFAs to go around. Perhaps pensionplaypen and other website based solutions will be able to help.
I suspect I will still be scratching my head well into 2015.
Accountants 'in the firing line'
[quote=Locutus]
Firstly, I'm puzzled why such a complex and costly system for administering workplace pensions for small employers was adopted in the first place.
The article says that a quarter of employers planned to ask their accountant for help with AE. That may be true for large employers, but the figure for small / micro employers is likely to be closer to 90%.
Locutus
You are absolutely right about the 90% - in DWP research published in July the figure was 84%, and in Nest research from Q1 it was 90% ............. so absolutely spot on!
The other troubling finding from the Nest research was that only 50% were prepared to pay additional fees for AE work. Which is a bit of an issue for both accountants / payroll bureau and the AE software/service suppliers such as ourselves!
Your point about complexity is of course right but it is unlikely to change, even if the2015 election gives us anew flavour of government - and Steve Webb indicated at the recent Capacity Crunch conference that further changes were highly unlikely.
You are 'in the firing line' for AE - better to embrace it if you can (there are models where you can make money) and be pro-active
Steve Brice pointed you at sources of possible help around the pension scheme(s) selection - I would encourage you to sign up to the Friends of Automatic Enrolment (it costs nothing) to get information and support from others in the field
Ed
Help
Locutus,
You say you have a little time before your first clients stage, why not start by attending your local Friends Of Auto Enrolment meetings?
There is a group on LinkedIn where you can find the local branch as well as a website which will be updated very soon, you can google it.
This will provide you with the ability to meet and discuss/debate these issues and share with those around you who may know more or less than you. You may even get to the stage where you make contact with people you can trust to work with your clients and solve the problem that way.
Nice and easy with no sales pitch!!
Re. Locutus - from Neil Esslemont
“Locutus, you may find it useful to look at the AE information available on our website, as it’s aimed at advisers like yourself: www.tpr.gov.uk/getready
“You may have already checked your clients staging dates and know they do not stage until October 2016, but it is worth pointing out to others that have not checked that the first small and micro employers have to meet their duties next summer. In addition, as over a hundred thousand employers are due to stage between summer 2015 and spring 2016, it may be worth your clients considering bringing their staging date forward.
“Our message to employers is ‘Act now. The law requires all employers to provide a workplace pension for certain staff. Find out how the change in law will affect you’”.
Start early with pension auto enrolment
As an HR consultant experienced in helping small businesses with pension auto enrolment I am advising all to start early and if possible to bring the process forward rather than postpone the inevitable. There can be many hiccups along the way of getting the process implemented and there is a lot of work involved so starting early makes good sense.
78% of small businesses will look for Advice
According to The Pensions Regulator 78% of small businesses will look to their bookkeepers, accountant, payroll bureau or advisor for advice. There is a really interesting report published by the Regulator which covers employer automatic enrolment research. An interesting fact was that only 23% of accountants and 26% of bookkeepers of small and micro payroll bureaus were aware of their clients staging dates. For those who have AE knowledge, there is a real opportunity for bureaus to offer AE as a service and charge a fee to handle the admin side; comply with staging, handle employee communication, assessment, etc.
@Loctus there are quite a few seminars, webinars out there on AE which do simplify the whole process. Some of the larger payroll providers are adopting a scare mongering approach so I would avoid them. BrightPay will be running a series of webinars in feb and march next year too. I agree with @Ed Holt ‘be pro-active’!
You could also subscribe to the Pensions regulator’s newsletter, a lot of information available there - https://forms.thepensionsregulator.gov.uk/subscribe.aspx
Once I confirm webinar dates I’ll put the link up here as you might be interested.
The other 22% will be in for a shock!
If 22% of SMEs and Micros will be doing it al themselves I think they are in for a nasty shock. I wouldn't be surprised if the Pensions Regulator will have their work cut out as thats over 250,000 employers who probably won't have the faintest idea of what they are expected to do.