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Regulator concerned over pension advice

27th Aug 2014
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People without the right skills and knowledge should steer clear of giving advice on choice of pension scheme, according to The Pensions Regulator (TPR).

An AccountingWEB contributor recently asked the regulator how it would address the shortage of advice around automatic enrolment (AE) for small employers.

He pointed out that there were many unregulated advisers who they could educate to help promote good pension purchasing by employers, referring back to this FCA and TPR statement in March: “Advice to employers on scheme selection is not regulated”.

The response from TPR was: “Although giving advice to an employer regarding their choice of pension scheme and/or fund is currently unregulated, TPR believes that people without the right skills and knowledge should not be giving advice or expressing an opinion on this and we recommend sticking to fact based communications on this matter.

“There is also a risk of blurring the edges and straying into the regulated advice space, if the individual representing the employer is or will be a pension scheme member, as they could be investing their own money into the pension scheme.

“We believe that the ICEAW have published a handbook which advises their members against giving advice or guidance to employers on the choice of pension.”

A recent government consultation on scheme selection outlined the concern within TPR that smaller employers won't be able to take informed decisions on their pensions.

In a response to TPR on choosing a pension scheme, the Pensions PlayPen said: “Our experience so far suggests that most accountants do not think they can advise on workplace pensions full stop. Until that impression is dispelled (and it’s not being dispelled by ICAEW) then it’s hard to see most practitioners helping in choosing a pension.

“We have been disappointed by the failure of the ICAEW in dispelling these prejudices and suspect that with its help more than 41% of accountants would want to get involved in scheme selection.”

It added that the regulator could be doing more with accountants, moving from just AE compliance to promoting the capacity of accountants to help choose a pension.

There is also a body of opinion in the pensions industry that choice doesn't matter and small employers will just get “shunted” into NEST.

Pension PlayPen’s Sarah Hutchinson, who sits on several of the ICAEW's pension accounting boards, told AccountingWEB that NEST would not be suitable for all employers and that there is unlikely to be capacity within NEST to meet demand if no choices are taken.

“NEST has to be there and providing, so they don’t really have a choice and they’ll have to cope. They will be swamped so you won’t get much help and service, but they will have to provide a service,” Hutchinson said.

But she warned: “If you’ve got older employees, which lots of businesses have, NEST doesn’t make sense because there are a lot of charges in the first few years. So why would you put people who are 55 into NEST? Not everybody’s 18, it’s your whole workforce you’re looking at.”

Steve Brice, business development manager at LP Auto Enrolment Solutions, also told AccountingWEB that there was a risk of blurring the edges and straying into the regulated advice space.

“As we move along the staging date timetable accountants and other professionals will be engaging with increasingly smaller employers. The person who the accountant will ‘advise’ as the employer/business owner will also likely become a member of the scheme. Where you can argue the merits of this advice in the context of good pension outcomes, what happens if subsequent to that advice the government change the rules and, for example, reduce the maximum charge further?

“If the scheme recommended decides that they do not want to follow suit with this further decrease, as a number of providers have already done following the latest 0.75% cap, who will establish the new scheme for that employer? How will that member/employer feel about the ‘advice’ they received and will this damage the existing relationship?

“More over what will that employer be prepared to pay for further advice when their first experience was a scheme that subsequently proved to not be fit for purpose? Which accountant would want to run the risk of giving this style of advice without the proper research, experience and knowledge whether it is regulated or not?” Brice said.

Earlier this month TPR said more than four million workers had been automatically enrolled into a workplace pension so far.

AccountingWEB has 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.

Replies (18)

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By johnporter
29th Aug 2014 12:38

Auto Pensions

So who is going to give the advice FREE

The Pension Regulator not on your life he's waiting for the fallout in 20/30 years time when he can make a few bucks by deciding that everybody gave bad advice & nobody should have been given these pensions in the first place because the Government were getting themselves out af a hole they dug for themselves. Why was the NI paid towards SWERPs just transferred straight to a Nest type Pension with top up availability& save everybody the chaos & cost . But then that would have been the sensible solution & when did they the Government/Civil Service/Tax authorities have any of that.

So what is the answer unless you are a qualified Financial Adviser basically tell your client to go & spend money speaking to one @ £250 per hour + to come back with NEST or similar

for the small employer.

Guess who gets screwed again/the small businessman.

Thanks (1)
Replying to In a Daze:
By Charles Worth
03rd Sep 2014 18:28





This is just to respond on behalf of ICAEW to the original comments made about our views on the regulatory position. I'm happy to confirm that ICAEW does not have any reason to disagree with the joint statement of the FCA and the Pensions Regulator (that advising employers on scheme selection is not in in itself regulated activity) as a general proposition. However, as is highlighted in the article (and various comments in the blogs) this is a complex area and advisors need to consider carefully the risk of straying into regulated areas in any particular case and other risks such as those noted in the article. We will shortly be issuing an updated version of our guidance to members to reflect the regulators’ statement on this issue (amongst other things).


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29th Aug 2014 13:22

Options for advice and assistance......


I think the regulator was saying that no-one should be advising without knowledge and experience, not that no-one should advise at all.

Having said that, pension play pen will do the whole job for £500 plus VAT!

Others will come to the market in time I am sure.

It is also important to understand that there is a lot of work required to set up the project before selecting your provider otherwise selection of a scheme becomes mute as you do not know what you require of that provider in terms of services and support.

Example: Sage has a cracking piece of software (as I am sure do others!) that will process all assessments and deal with comms for you...but if you do not take the time to set up all of the categories and criteria correctly, and I mean in the actual payroll records as well as in the pensions center then frankly the software will be useless.

Yes it costs money and yes its in addition to what is already being paid, but isn't that the case with any change?

All of the above (selecting a pension provider or setting up your AE software) takes time and preparation with an individual who knows what they are doing. If there is a lack of expertise in either area then help is required and that help will need to be priced and tailored to the smaller market. The days of charging £,000's for face to face consultation are already gone. We all have to get smarter and better at delivering support/guidance in a more time efficient way and that will play to the regulator's wishes and to the benefit of payroll bureau's and smaller businesses alike.   



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By ireallyshouldknowthisbut
29th Aug 2014 13:50


And we haven't even got to the micro employers yet which is where 90%+ of the volume is and 95% of the resistance will be.

I think the ICAEW is right - the small prac should keep well out of it. Its simply not our problem, and if you try to be helpful it is likely to blow back in your face. 

Just becuase we can deal with tax and small business accounts and processes does NOT qualify us for dealing with the pensions industry. 

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Replying to Rammstein1:
paddle steamer
29th Aug 2014 16:49

Risks to smaller practititioners

ireallyshouldknowthisbut wrote:

And we haven't even got to the micro employers yet which is where 90%+ of the volume is and 95% of the resistance will be.

I think the ICAEW is right - the small prac should keep well out of it. Its simply not our problem, and if you try to be helpful it is likely to blow back in your face. 

Just becuase we can deal with tax and small business accounts and processes does NOT qualify us for dealing with the pensions industry. 


If smaller practitioners who offer a payroll service to clients don't get involved are they not seriously at risk of losing business to firms who do get involved/are geared for AE?

It may be smaller firms try to outsource payroll operations to providers who will not also poach the accounts prep/ tax work they do for the client. This at least may preserve their core activities. If they don't , or if they delay, they run the risk of a firm that offers all services taking the payroll work and thereafter gaining control of the entirety of the client's accounts/tax needs; in my opinion smaller clients prefer a one stop shop, to me AE is a ticking time bomb for the smaller practitioner 

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By ireallyshouldknowthisbut
29th Aug 2014 17:16


We dont run Payroll, only "director only" ones. Too much hassle. This pension stuff is exactly why I sidestep the whole thing. More and more is being shoved through payroll and you get zero thanks for dealing with it from clients. 

Quite frankly you have to have a very poor relationship with your client to lose them just because a third party payroll provider does this one off activity well.  Our clients sub out lots of things to others.  Our clients tend to use standalone agencies, they wouldnt use other accountant's payroll services as they tend to be expensive, payroll is a "clerk" thing not an "accountant" thing in my eyes. 

I should point out all my clients are small. 1 or 2 on the payroll.  A big one would be 5.

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By johnporter
29th Aug 2014 17:51


Who is going to advise the Individual employee!

Ordinary working class guys have even less financial acumen that your city banker

Take you Pension Play pen example;

A 55 year who earns maybe £500 per week invested even 10% including employers contribution 

into a Pension That is £50 per week roughly £2500 per annum ( minimum he should be aiming for is a pension pot of £100k )

say he has to retire at 66 pension fund of around £30k. Actual Pension would be around £100 per month equivalent if lucky.

Are any of the providers giving expected Pension Returns to each individual based on expected contributions. 




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By Henry Tapper
30th Aug 2014 08:08

"Skill and knowledge"

The problem with using a phrase like "skill and knowledge" is that it is absolutely meaningless. I work for a firm of actuaries that have skill and knowledge coming out of their ears, but most actuaries have no means of applying it to 5 man companies trying to choose a workplace pension!

You can have level 6 qualifications as a financial adviser and still not understand how hooking your payroll up to that provider is going to cause problems, you can't learn the skills of understanding a company's needs and matching them to the right workplace pension.

The Pension Regulator is "risk-based" which means he would like minimum scope for litigation. The Regulator would like factual presentation without "opinion". This assumes that employers will be able to look at pensions data and make rational decisions by properly comparing the propositions of NEST and AEGON and NOW and Legal & General.

This is simply beyond most employers., THEY NEED OPINION, they need simple statements like "look- if your average age of employee is over 45, NEST doesn't look a great deal" or "Legal and General works for employers who want x,y and z".

Organising all those nuggets of information into one place and then using technology to produce messages which say "employers like you choose x" is very difficult , expensive and risks failure. But it's what the 1m plus SMEs and micros still to buy their workplace pension need.

Steve mentioned that they can get all this information and come to a decision  (with a thick 40 page actuarial report recording how they got there) £500. He's right -

If small practices are going to get involved- (and if they don't who will?), they cannot take the risk of choosing a pension on themselves, they should tell their clients to use a repository of skill and knowledge and get them to click that link.

Instead of telling people not to do things, it's time that the Regulator sign-posted places like our site, where people can do things "with skill and knowledge".

One of the three campaigns of the Friends of Auto-Enrolment is to encourage employers to take time to choose a pension and I hope that anyone reading this article and the comments below, will feel a enthusiastic about doing that, if only to point clients in the right direction.




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By Jekyll and Hyde
30th Aug 2014 09:30

I think the penny is starting to drop....
.... For the pension regulator, that small businesses are not interested.

It really is that simple. Micro businesses struggle to survive in the corporate environment, which is why they quite often fail to take the right advice on tax, pensions, employment law, health & safety to name a few. Rules become more complicated and are faster moving in pace.

Quite simply micro business owners are still coming to terms with the administration around RTI. They do not have the funds to pay someone annually to provide full advice on tax compliance (take the new agency rules and the time and costs to implement, should it be an issue) and also at the same time take full advice on all the other issues of running a business somewhat single handed.

Once again the establishment has looked at large businesses and formulated a pension plan that fits well with large business and is forcing it on the micro sector. It is a jigsaw puzzle that just will not fit.

I had aan Issue with a micro employer 2 weeks ago when she received an attachment of earnings request for DWP. Her response was that it will take more time to delay with and she doesn't get paid to do this. Why should she? My only response was that ad an employer the goverment is using you as an unpaid agent to collect their debts and deal with their duties.

The micro business employer still believed that their employee costs are just that.

As I have said before, if the government wants to implement this very expensive system on micro employers then the government need to step up and increase its undertakings. The item that springs to mind is the implementation of the online PAYe system when micro employers had 5 years of sliding down scale incentives. So perhaps what should happen is a change of staging dates and simply say from 6/4/17 all employers will be enrolled on nest unless other schemes have been set up. Make that mandatory. However for business with less than 20 employees for the first year there is no employer contributions, 2nd year .5% and so on. This would help the employer and would mean that no pension advice is needed or time wasted.

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By Henry Tapper
31st Aug 2014 07:37

What about the staff?

Jekyll and Hyde.

There is one big difference between Auto-enrolment  and  initiatives such as RTI and online PAYE.

Auto-enrolment leads to a radical difference in how ordinary people use their pay.

What you are objecting too is not just the imposition of rules around the collection of the contributions  but also the concept that employers have a fiduciary responsibility for the choice of pension (and the welfare of staff).

Employers have responsibilities within work- for health and safety, for equal treatment and of course to collect taxes under PAYE. All of these are "employee benefits".

The auto-enrolment legislation kicked off seriously in 2009 and by the time most employers are impacted, it will have been flagged for over 6 years.

Large employers have had to come to terms with it and it really has been tough for many. Many of the small employers enrolling in the next three years will become large companies.

I think what you are suggesting will happen by default and many small employers will be left behind -unless those who look after their books, their payroll and provide other business services step in and help.

The shame of it is that the Regulator's attitude seems to be to exclude all those but those with "skill and knowledge" from helping. Since "skill and knowledge are blanket terms- this is a shot across the bows to the accountancy profession and the ICAEW seem only too keen to take cover".

As for the expense, I think the market will find a level. We are actively looking at ways we can share our costs more effectively and not have to levy them all on the employer but we are up against laws against "financial inducements" and of course HMRC themselves who demand that we collect VAT on a service which is helping employers comply with HMRC rules (VAT many micros won't be able to claim back). I should point out that there is no on-going charge for using

Thanks for the post- it really got me thinking and you lay down the challenge really well. As the National Campaigns Manager for the Friends of Auto-Enrolment, I need to understand the problem and your post helps.





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By Jekyll and Hyde
31st Aug 2014 10:16

yes, that is my objection.
And that of virtually all the micro businesses I have come accross.

Large employers are able to deal with changes as they are able to manipulate the shareholders and government. They set the prices. You just have to look at the larger retail buying powers and the issues raised over the last few years on connection to fair trade prices for suppliers. Those suppliers are sometimes medium employers (middlemen) who then fix prices again for the smaller suppliers. The end result is that the market has nothing to do with how micro business fix price, It is down to legislation and courts allowing this to happen time and again.

So if markets were fair, then there would be no buying powers of large corporates, but the markets are not fair and hence the micro business employer cannot be just say to the businesses up the good chain, sorry no can do.

A lot of micro businesses are controlled by 1 or 2 people and have a small labour force, which again doesn't have the overall funds or resources to deal with all the legislation required. That is not a failing on their part, simply that legislation has evolved at a faster pace than is manageable. You just need to read some questions on a website to see that the tax system is far too complex and unmanageable to the micro business (Indeed large business).

As for the employer becoming a socially responsible for the employee. With the new agency worker rules, zero hour contracts, more IR35 companies cropping up and the use of more subcontract workers, I do wonder if large employers (including government agencies) are really accepting the responsibility of its workers or are just pushing the costs of auto enrolment and other legislation down the food chain to smaller employers who simply do not have the resources.

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Replying to Montrose:
By Henry Tapper
31st Aug 2014 15:49

No objection!

Jekyll and Hyde wrote:
As for the employer becoming a socially responsible for the employee. With the new agency worker rules, zero hour contracts, more IR35 companies cropping up and the use of more subcontract workers, I do wonder if large employers (including government agencies) are really accepting the responsibility of its workers or are just pushing the costs of auto enrolment and other legislation down the food chain to smaller employers who simply do not have the resources.


It's a compelling argument but one that focuses too much on the perceived negative. I was hearing similar comments from clients who we staged in the last twelve months and I'm not hearing them moaning post staging.

We have seen some engineering to defer enrolment of workers to 2017 but 4m new employees are in workplace pensions with opt-out rates below 10% (still).

And many of the larger companies have had to pay heavily to adapt their systems (SAP modifications don't come cheap) so I don't think this is "dumping" on the micros.

So (so far) auto-enrolment has worked better than expected.

Going forward the challenges are going to be different , but if you are with a forward thinking payroll supplier or have a good bureau,. most of the on-cost of AE will be  absorbed and though managing  auto-enrolment will add to the payroll prices ,some of the prices quoted a year or so back are looking "historically far fetched".

There is a lot to be said for operating a good workplace pension scheme and those employers who embrace auto-enrolment will most benefit in terms of "employee value proposition".

I think that SMEs and micros are well advised to look forward to Auto-Enrolment and plan for it, otherwise you may be proved right




Thanks (1)
01st Sep 2014 08:57

Lessons learnt....

Maybe the larger fees paid by the big companies have been the proving ground for smaller company solutions at a fraction of the cost.

Formula 1 is an expensive pastime for car/engine manufacturers, they are not involved for fun. The lessons they learnt in this environment are the adaptations you and I drive years later on the roads of Britain.

SAP changes are not cheap but software add-ons to off the shelf payroll software is becoming cheap. Bureaus are coming to terms with the fact that they will be involved in AE at some level. To that end you can either ignore it and lose all your clients (save the one man/woman enterprises who will not yet be affected) or adapt using an off the shelf solution that ensures compliance.

I am sure that back in the dim and distant past running a payroll for a business was bespoke and expensive now we have off the shelf solutions that provide all the assistance you need for a fraction of this bespoke price.

Evolution and competition will do the same to AE services and they will find their level very soon. What they wont do is go away!! 

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By justsotax
01st Sep 2014 12:22

success of AE

shouldn't be linked to the number who opt out.  The fact is an employee is left with the choice of a payrise (if lucky) plus AE contribution....or if opt out exactly the same payrise (but no employer contributions) - for all but those approaching retirement (or who have been tipped the wink that they will get a bigger payrise by opting out...) its a no brainer.  Success will be measured in 25-30 years time when someone retires having made a full lifetimes contribution to AE, only to find charges and poor investment choices by NEST has left little benefit.....  

Thanks (1)
01st Sep 2014 14:10

In 25-30 years...

NEST charges will be the least of our worries as over this period of time they will have had the effect of reducing investment returns by a margin which is well below the governments minimums. 

Investment returns will be a totally different question as over the next few years contributions into NEST will soar and then increase again as the phasing period ends...the transfer restrictions will be released and the cap on contributions will be removed.

Track record so far is no worse than most and better than some but lets see how Mark Fawcett and his team fare in the years to come!!


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By johnporter
01st Sep 2014 15:27


This whole fiasco has been set off by the Government not having either the guts just to increase Ni rates directly &  the funds placed with an Pensioner provider like Nest with a 5 year review of providers to see who can match government expectations. Again with an easy option for employees to opt out.

Remember the opt out of Serps around 1989 & start a fantastic  personal pension everyone was going to receive by changing  that died very quickly & the regulator once he caught up with the various details discovered in most cases it was totally unsuitable. 




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By Henry Tapper
03rd Sep 2014 13:10

NEST is not the only fruit

If the Government's agenda is simply to use NEST, it should tell that to the other providers and save us all a lot of time and money creating interfaces to suit the choice of employers.

I have been into the DWP and Treasury and spoken to senior civil servants about this and I have also asked questions directly to Ministers. All I can say is what I am told again and again.

The Government are pro-employer-engagement in choice. They want employers to know why they made the decision they did and are worried about employers not being able to tell staff both why they picked one provider and also why they didn't consider another.

We are not talking about decisions which are meaningless. There will be different outcomes from one workplace pension to another and while employers can't be held responsible for picking a loser- they should be able to articulate why they came to the decision they did.

This is (on the risk side) about creating an audit trail and on the reward side, about showing your employees that you care about where there money goes.

Whether you approach this as a risk or an HR issue, you have got to engage with your decision. You would in any other aspect of your business with such a large amount of money at stake.

Arguments that the whole thing will just fall apart do not wash and are extremely dangerous. Wilful non-compliance based on speculation that this will go away is very bad practice indeed!




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By Jekyll and Hyde
03rd Sep 2014 13:51

Tell this to the little sole trader retailer shop owner....

... who has no financial training and isn't at all interested, all they want to do is run their little business and make their drawings fit their personal expenses. To ensure that they don't work 7 days a week 52 weeks a year or become unemployed themselves they employ shop staff to assist them. They make around £15,000 or so profits a year (can be higher and can also be lower), not nearly enough to cope with their personal costs that increase year on year and also the other costs of running a business, indeed increases in NMW and some projections on what this should be. Switch this to many small trade business, that is also flooded with cheaper alternative foreign labour, and the owners are struggling to actually meet their own personal expenditure on a yearly basis (because we are all in this together! rubbish).

Not every business is run at a major profit and not every business owner is capable of undertaking such business decisions as is suggested and actually wants or cares for it, let alone has the business finances to pay for it. Most businesses I come across in my professional and social capacity just wants to earn enough money to keep their finances afloat with as little stress as possible. These are the businesses the government are not interested in "getting on board" directly, but wants third party businesses to do its work for them unpaid. These are also the businesses that is in the sector that a lot of pension providers are not altogether interested in as well as they are not able to earn decent returns from!

So if people do have access to top civil servants in Treasury and DWP, and indeed ministers then perhaps that need to all look more closely at this sector of businesses and come to some kind of incentive to bring these businesses on board (like the ones I have suggested earlier) or this sector will just do what it has to do, when it has to do it, just to get by like it always has.

It may be considered bad practice by some, especially those dealing with the higher hierarchy of businesses, but equally some of the practices undertaken by government and the financial sector (eg. banks) are also considered bad practice to such businesses.



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