It's AE-pocalypse now for accountants

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New research indicates that the anticipated transfer of responsibilities from financial advisers to accountants and payroll as auto enrolment intermediaries is happening far slower than anticipated. But things could be about to change - drastically. 

Of the intermediaries surveyed by Pension PlayPen, only 3% self-identified as accountants. According to the research, 51% were financial advisers, indicating the crux of AE intermediary responsibilities is still falling on IFAs.

These figures are in stark contrast with NEST’s insight 2015 survey. In NEST’s survey, 49% of employers with 2016 staging dates said they expected to get their AE advice from accountants and payroll. Only 14% said IFAs. But from Tapper’s own research, that hasn’t happened at all.

“There are three messages here,” said Tapper, founder of Pension PlayPen. “We underestimated accountants' risk aversion in wanting to act as intermediaries, IFAs have hung around in the market for longer than expected and, simply put, clients have been procrastinating.”

Tapper emphasised the last point in particular: “Auto enrolment hasn’t hit accountants yet. It’s only hitting them now, but by golly, things will change very quickly”. All of those tardy micro and small employers - who should’ve started working on AE last year already - will now rush to comply, Tapper told AccountingWEB.

Colin Morton, an IFA at Richardsons Group, is also expecting a bottleneck as IFAs eventually leave the market, right as the AE tsunami nears. As the staging employers become smaller, said Morton, they’ll struggle to pay their pension contributions and an IFA.

“IFAs can’t take fees directly from individuals’ plans anymore. We can charge the employer set up fees, but we can’t take anything from the individual employees. So the responsibility has shifted to the employers. So it’s up to them to either accept our fees, or go it alone,” said Morton.

“It’ll be a case of the market will decide when that point is, because the work will dry up. I’d imagine as the companies start getting smaller, with smaller budgets, it’ll happen naturally.”

These small employers will turn to their accountant for advice as they’ll struggle to afford IFA fees, according to Tapper. Legally there is nothing prohibiting an accountant from giving auto enrolment advice. “As long as it’s done on a business-to-business basis and the end customer is the employer and not the individual employees, it does not need to be regulated,” explained Tapper.

Accountants who operate payroll services will need to get over their AE phobia as the staging surge nears, argued Tapper. “If you operate payroll, it’s very hard for you not to operate AE. It’s hard to see a subset of accountants that want to do payroll - but don’t want to do AE. They can’t hold on to their payroll department and not do AE.”

AccountingWEB launched the No-one gets left behind campaign to alert as many accountants as possible to the obligations implied by auto enrolment. Read our simple eight-point statement which sets out the auto enrolment facts you need to know.

About Francois Badenhorst

Francois

I'm AccountingWEB's business editor. Feel free to get in touch with comments, tips, scoops or irreverent banter. 

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03rd Feb 2016 13:51

I struggle with AE

We perform payroll for a pub company with 59 staff - seven of whom qualify for AE. The firm appointed and pays for a  'AE Advisor' (who were recommended by their accountants!) who were supposed to take care of the issue.

Not so, We are doing all the groundwork: registration/letters/payroll deductions/identifying staff who qualify etc and it's a nightmare.

Trying to format the (weekly) returns to, in this case, the people's pension is an odyssey in itself as the software - QuickBooks - corrupts the AE file as it is saved in excel prior to submission, so the numbers are wrong. Additionally the file then has to be re-formatted into a spreadsheet acceptable to People's pension. Column after column of details. All this for about £30 as week in pension contributions (employee and employer)

It's no wonder accountant's don't want to know, this issue will become a millstone for smaller  employers, I wonder how many companies with only one or two staff when faced with the cost and complexity will start issuing P45's?

 

 

 

 

 

 

 

 

 

 

 

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By Kazmc
03rd Feb 2016 16:55

We are a payroll bureau within an accountants and

for us January has been hectic, with 8 clients staging with 3 different pension providers.

Not one of the csv uploads from payroll software to pension providers is correct and they all have to have data manually adjusted within the files before uploading.

We will be up to around 35 companies staged by August (around 130 companies maximum eventually)and we hope that both payroll software companies and pension providers have ironed out most of the glitches by then.

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03rd Feb 2016 18:32

Glad

It's not just us having 'issues'.

It will only get worse....

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By NYB
03rd Feb 2016 19:08

AE difficulties
I sympathise with the above issues. It sounds absolutely dire. The answer in my opinion is in the payroll software. Ours handles all of the above. January we came to the end of one clients postponement period. The payroll and letters have gone out auto populated, payroll done and conts submitted at click of a button to Nest. Brightpay has an auto portal - no CSV needed. With NEST. I understand other pension providers might follow. I would add though that we prepared a year in advance for this & fully worked out how to do it.

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By nikki_h
03rd Feb 2016 20:15

Nyb I hope mine goes as smoothly! I'm with brightpay and NEST with an enrolment date of 1st March. I'm itching to get to 1st March to give it a go. Once I've done one client ill hopefully know what I'm doing so the next one will be easy! ;-)

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By NYB
03rd Feb 2016 20:41

Brightpay are good at helping with the payroll side. NEST not so. More prescriptive - bit like HMRC. I am always prepared to help. I have spent a year getting to grips with both parts by liaising with all sorts including a chap with direct access to TPR.

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04th Feb 2016 14:51

Partner

These and many other reasons (pension choice etc) are the reasons why accountants and payroll bureaux are partnering with specialists who can deal with all of these aspects easily for them.

No alterations to payroll processes and communications and uploads along with the declaration of compliance and employees queries are dealt with by a third party. It also means that it will not matter which pension provider the client chooses it doesn't alter the way that payroll runs as they only provide one template, to the third party and the conversation to a pension provider specific format is their issue not payroll's. Unless of course the payroll wants to deal with assessments in which case a pension scheme can be selected and set up by the "adviser" and payroll given full delegated access to the provider scheme at outset.

 

 

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By NYB
04th Feb 2016 20:47

Delegated Access
Your latter point is what we are doing. Working very well. So. Far!

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By Alex_T
04th Feb 2016 20:46

Shop around!

I would agree with NYB, your payroll software is key. I spent a lot of time testing several payroll packages and finally settled on BrightPay because I found its Auto Enrolment capabilities far superior to its competitors. Very sad I know but I am quite looking forward to my clients' staging over the coming months. I am hoping everything will go smoothly. 

Change can be unsettling but sometimes its worth shopping around. Most payroll packages on the market have an option to import data from other software providers.

Best of luck!

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05th Feb 2016 13:04

deleted

Double post

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05th Feb 2016 13:03

Payroll...

Alex_T wrote:

I would agree with NYB, your payroll software is key. I spent a lot of time testing several payroll packages and finally settled on BrightPay because I found its Auto Enrolment capabilities far superior to its competitors. Very sad I know but I am quite looking forward to my clients' staging over the coming months. I am hoping everything will go smoothly. 

Change can be unsettling but sometimes its worth shopping around. Most payroll packages on the market have an option to import data from other software providers.

Best of luck!

 

One of the issues with ANY payroll system ( as far as I know) is that they won't give analysis as to the cost impact of each of the four available definitions of pensionable salary. Getting it wrong will result in employers paying FAR more than they need - which can be an issue if they wan to minimise their pension cost.

The largest variances I've come across are in the order of £160k per annum.

Eye watering.

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05th Feb 2016 12:25

Whole thing is a nightmare

We have currently used Nest, Now Pensions, The Peoples Pensions, Royal London, Standard Life and Smart Pensions and they have so far all been a nightmare.

There isn't one pay period where the upload goes smoothly.  The pension companies don't seem to be "talking" to the payroll software companies and so are using different terminology for the same things, causing chaos and confusion.

Accountants don't want to be involved as they don't/can't advise on specific pension companies for their clients and therefore prefer to hand over the set up process to IFA's as they are regulated for this. 

Our biggest concern is will there be a PPI style claim in the future..."were you mis-sold an auto-enrolment pension scheme ? ...."would you like to make a claim ? " !!!!!

 

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By Kazmc
05th Feb 2016 12:32

@amanda67
Couldn't agree more. The difference in terminology has really caused massive problems. Pension providers are using terms 'gross' and 'net' for the same types of tax relief schemes, utterly confusing

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05th Feb 2016 12:37

@Kazmc

Glad I'm not the only one then ! @Kazmc.

Wish they could have just increased National Insurance and left AE out completely :-(

 

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05th Feb 2016 13:02

It will get worse I suspect!

with 500,000 small business staging in 2016 alone I am afraid that bottlenecks will appear and likely quite soon. Data is critical to a smooth AE process both quality and format. We are seeing more and more automation in this sector but still a long way to go before it is a simple and accurate process. 

 

I have been recommending that accountants  "tame" auto enrolment by taking a lot of the variables out. and even with a small number of clients bulk set up via a simple file makes a lo of sense.

 

I will be running a webinar on this exact subject at the end of Feb. get in touch if anyone interested

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05th Feb 2016 13:31

Changing payroll software

The thought of changing software is a big concern but end of the tax year would be a good time to do so..  At present we use Forbes which does everything and more.  Has anyone used Forbes for Auto Enrolment?

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05th Feb 2016 16:15

"These small employers will turn to their accountants"

No, unfortunately not all of them will.

My Mr Bloggs' company's staging date is 1 Oct 2016. I've spoken to him about the need to get n touch with Nest, as he might just as well use them. I've just emailed him about the large fines if he doesn't stage by that date today and asked him to call me so he can authorise me to go ahead on his behalf.

My nightmare scenario is that he won't stage on time or meet with the 2 employees beforehand, and I will then have to resign and do the standard SOCA report.

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05th Feb 2016 16:47

Liability...

Moonbeam wrote:

No, unfortunately not all of them will.

My Mr Bloggs' company's staging date is 1 Oct 2016. I've spoken to him about the need to get n touch with Nest, as he might just as well use them. I've just emailed him about the large fines if he doesn't stage by that date today and asked him to call me so he can authorise me to go ahead on his behalf.

My nightmare scenario is that he won't stage on time or meet with the 2 employees beforehand, and I will then have to resign and do the standard SOCA report.

 

While you are of course right to be concerned, you may be pleased to hear that the liability for auto enrolment lies solely with the employer.

Even if Mr. Bloggs engages you to advise and support him, he cannot devolve that responsibility to you - although the Regulator does mention Third Party fines... 

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06th Feb 2016 09:33

we have to

print copy payslips every week for staff who are eligible then transpose the relevant information to the people's pension spreadsheet (in itself a masterstroke in obfuscation) before submitting it to them. There are only eight eligible staff (out of 60) and the total amount is about £30 a week so the cost of this process alone is as much as the miserably small pension payments!

My advice?

Never, ever employ anybody.

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06th Feb 2016 16:49

The People's Pension

As I understand it TPP doesn't have any Assessment tools - which will explain why you're facing the issues you are.

memyeslf-eye, I note you say that you're only doing this for eight out of sixt staff - are you Assessing the whole workforce every pay reference period? 

Regards

MIke

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By NYB
06th Feb 2016 21:10

Software Software & again Software.
Thread going round in circles. You need a payroll software package that automatically does it. Assessment. Letters you name it. Seems many out there are making it difficult for themselves. And also preparation. We started 12 months ago learning it inside out. & are now reaping the benefits at understanding the process. That is not to say we haven't had issues but easily resolved ones. And for goodness sake try to get them four weekly or monthly. You must forever be doing it.

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06th Feb 2016 22:05

If the only solution you have is a hammer,

Every problem looks like a nail...

Why assume payroll is the universal panacea? As I mentioned earlier, it won't guide you as to the costs of the four definitions of pensionable salary, for example. 

And try telling somebody who is paid weekly that they're now going to be paid monthly because payroll can't cope with their existing PRPs. 

Why not simply engage with somebody that does AE for a living? Declaration of self-interest; thats what we do.

But I do wonder how much angst ( and COST) could be solved by talking to an experienced third party... [email protected] for example... there are people that live and breath this and are aware of the issues - not to mention the unknown unknowns...Such as, "I don't need to worry about X, because X is a Director..."

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By NYB
07th Feb 2016 20:40

That's put me in my place good and sure. Just as an add on we work with AE specialists who put the pension in place explaining the responsibilities as well. Then we pick it up at payroll stage but still we communicate with each other. They do,their job so we can do ours.

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07th Feb 2016 11:01

yes

we assess them every week!

Most are young part time bar and waiting staff

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08th Feb 2016 09:47

Our 'specialists'

have done sod all. The client has now terminated the contract. However many specialists you engage, the day to day deductions and monitoring are and will always be done by whoever prepares the payroll via whatever software they use. They are not going to 'bolt on' additional software just for AE. Neither, as has been pointed out is the client going to move to monthly payroll (I know we've tried to get them to change).

Still, I'm fast becoming a 'specialist' in AE myself..... 

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09th Feb 2016 08:53

Things move on.....

I notice today that the first real transfers by API have taken place courtesy of a firm called Systemsync. They have come up with this clever piece of kit called Pensionsync (I know Will and the team and it seems to do what it says on the tin).

It isn't payroll...it isn't advice what it is is a piece of software that makes sure that all of the issues of generating csv files go away. As time goes on more and more payroll will decide to link up with this and more and more pension providers will do the same.

Having been aware of this for some two years or more as it was being developed means that we have been able to direct our offering towards incorporating this development. Thats about breathing and eating this stuff (being a sad AE nerd!) and not just looking at what is in front of you but what is coming around the corner.

AE is hard when done with a paper and pencil but it will get easier as automation kicks in....do you know if your system will integrate in time? Are you putting pressure on your providers or do you need new providers who are evolving this services day by day to make it easier for both payroll and adviser?

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15th Feb 2016 09:10

such problems

Most of the above could have been avoided if the Regulator and the MPs who voted for this had asked those who were to implement it rather than relying on civil servants who would make it difficult so to protect (their) jobs.

It seems that some want to blame the "Accountants" but as we are businessmen and women why would become involved without there being a profit.

A fair number of accountants have indicated that that they will not be offering autoenrolement advice.  If this number increases there will a shortfall in the number of employers who enrole ontime.

 

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15th Feb 2016 09:51

@pauljohston

I could not agree more. Government did not involve payroll at all in this process and have made it overly complex. 

No business will get involved in activity does not benefit them and neither should they.Many IFA's are not getting involved for exactly that reason.

...and on your last point, I believe that there are already many who have not completed their obligations on time and this may get worse unless those who are wanting to get involved do not find a way to ensure engagement sooner rather than later.

There is an expectation on the part of smaller businesses (research tells us) that they all think that accountants are all over this and have it all covered, just like RTI. Unfortunately this is not like RTI and not all accountants have this covered...because it makes no sense for them to do so.

Going forward payroll will work with AE and the two will not work exclusively. This means if anyone running payroll chooses not to deal with AE they are choosing to move this function of their business on to someone else.

Partnering with a specialist service that deals with AE may be one of the ways that payroll chooses to deal with AE and retain their existing payroll business...or even expand it.

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