Once tax is digital, you'll have time for pensions

Henry Tapper
Managing Director
Pension Playpen
Columnist
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Two days at Accountex have reminded me how I miss AccountingWeb. Working with 100 actuaries , I need calming down!

Back in 2014, I was warning the world about the auto-enrolment capacity crunch and how in 2017 the sky would fall on our heads if accountants didn't switch to API uploads and digitalise their service to meet the tsunami of staging that would be upon us.

Now we're here and my pensionplaypen.com sits inside Sage and slowly the APIs are falling into place. There is uncompliance but it is not on an epic scale. The Pensions Regulator is dishing out fines and we've seen a few escalating penalty notices but we are hardly in the grip of mass civil disobedience.

The payroll software community has raised its game, practitioners have reluctantly re-priced their payroll service contracts and some pension providers have woken up to a world without IFAs!

NEST have excelled, they have built to most payrolls and are at every conference, they have now some 360,000 employers sending them money and some 5m employees who have a NEST account (2m already dormant). It hasn't been a cheap route to market. At the end of March they announced a debt to the DWP of £539m, a number set to escalate to £1128m by 2026, before dwindling to nothing by 2038 when NEST is conservatively estimating it will be investing £500bn of our money!

I spoke late in the day at Accountex (5pm), you can see the slides here  https://www.slideshare.net/HenryTapper2/the-past-present-and-future-of-a...

My theme was simple - where there is muck there is brass. Auto-enrolment is mucky but the sums of wealth that will accumulate in workplace pensions (NEST and otherwise) are very substantial. IFAs are not interested - they can make money more easily. Accountants are the trusted advisers for small businesses but you feel you don't have the skills to advise on pensions.

Quite rightly, the Government has created new rules to make sure that the pensions we invest into are well governed and (save for some rogue outfits), money is now managed considerably better than anyone would have thought when auto-enrolment was dreamt up in 2004.

But all the benefit of the ICAEW's Mastertrust Assurance Framework and the FCA's Indepenend Governance Committees, there is still nowhere for accountants to go to , to provide employers with details of how the workplace pensions are doing.

Talking with Tony Margaretelli at Accountex, I realised that - for all accountants know, the money sent to pension providers might as well have been pumped into a black hole.

I hope, in future blogs, to give you a little feedback on how pension providers are doing; or at least point you to places where you can get information to help your clients.

If this making tax digital mularkey catches on, you may be looking for something to do!

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17th May 2017 17:30

Why would we be "looking for something to do"?

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19th May 2017 08:46

Reporting - it would be very useful if NEST could do a proper report by employee of pension amounts invested for each tax year. Then I could reconcile this to the accounts, in the same way as I do for payroll costs to the P32.

I have pointed out to NEST that if there is at some point a "black hole" in the system they are liable to end up copping quite a bit of the cost. For example, where an ambulance chasing lawyer in 5 years' time is representing an employee where the NEST fund is say £5k but £10k has been taken out of the employee's payslips, it could well be that NEST are the only folk to sue.

This would be the case where the employer had gone bust, in the 20 to 30 year timescales of pension provision this will inevitably happen a lot.

Feedback from NEST is that they are "looking at" this issue.

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