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Auto enrolment off small business radar

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14th Jan 2014
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A third of small businesses aren’t planning to seek any advice on pensions despite fears of a coming automatic enrolment (AE) tsunami in the months ahead.

Sage’s omnibus survey found one in 10 respondents didn’t even know about auto enrolment, while around half won’t be communicating the changes to employees or spending any extra time getting ready for it.

Readers of AccountingWEB will be well aware that many businesses are not prepared for the legislative change, but with staging dates looming for businesses sized between 50 and 250 employees, time is running out.

In terms of the impact on small businesses, the survey results revealed almost half of businesses questioned will have to freeze wages as a result of auto enrolment. One in 10 will have to cut wages and a third are worried about the potential impact on cash flow.

Paul Tooth, managing director of Sage UKI’s Accountants’ Division, said: “It’s concerning that so many small businesses still have their heads in the sand about preparing for auto enrolment.

“We would strongly urge small business owners to speak to their accountant as soon as possible to see how they can help ease the burden.”

Small businesses not prepared for auto enrolment should consult their accounting partner for guidance and advice around choosing pension plans, planning for tax and payroll implications, choosing the right software and how it could affect cash flow and forecasting.

If you haven’t already done so it’s important to find out your staging date to see how much time you have to prepare. Preparation should start around 18 months prior to your staging date.

You can find out the staging date for your business by entering your PAYE reference into The Pension Regulator’s staging date tool.

Last October the minister for pensions, Steve Webb, said firms with less than 50 employees were “fertile territory” for auto enrolment.

Speaking at a work and pensions select committee evidence session, he said they will be dealing with a set of people who have never been contract-enrolled before, so in a way they are more fertile territory compared to larger businesses.

Replies (17)

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By Moonbeam
14th Jan 2014 17:41

Don't expect Sage staff to really understand this either

I have just purchased Sage's module for auto enrolment so you would think that they would be able to advise me on how to cope in certain situations. Eg you run the first payroll on auto enrolment and some staff then opt out and have to have their pay recalculated for the last payroll in order to get the refund correctly credited to them.

Well I think you redo their previous pay, but Sage help line don't seem to know how best to deal with this. I've spoken to predominantly bright people on the help line about this, and they have positively squirmed. That is, of course because they have not had good enough training themselves. I feel sorry for them.

Maybe Paul Tooth doesn't know the answer to this question, but as I'm paying his company regularly for software and help it would be lovely to know someone in his heirarchy could help with this question.

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By finegana
14th Jan 2014 18:41

Sage support
I also hear there are holes in the software functionality itself, although we will reserve judgement until fully tested by our team. We are very reluctant to pay the exorbitant sage training fees, especially when they too have little real-world experience with the product.
We worry about clients not considering ae yet, and will be pushing on from march with information distribution through many channels.
Testing will commence from February for us.

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By Moonbeam
14th Jan 2014 19:02

Testing for Real from Feb for me

@Finegana  Given the certain low number of overall users for this module next month, the poor sod that finds those bugs is likely to be me. I expect February to be a difficult month with the air turning blue on a regular basis.

I certainly agree that the Sage training fees are exorbitant, and if we've paid for the product we should expect help on using it without yet another payment. Having looked at some of the videos about AE that you can see free of charge with the standard software, they seem to waste a great deal of time trying to flog the pensions module rather than explaining anything.

Even if I had money to burn, I know I'd be disappointed if I spent anything more on training, as the webinars almost certainly won't deal with the complicated areas that the helpline staff don't understand.

The only benefit to me of my 2 clients starting with AE now is that I might possibly be a world expert in the future. Then again, possibly not! 

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By SJBeale
15th Jan 2014 15:14

Pension Auto Enrolment - How Are We Doing?

In September 2013 the Pension Regulator published a very illuminating report on progress of pension auto enrolment to that date which I summarised in my blog http://sjbealehrconsult.co.uk/blog/pension-auto-enrolment-how-are-we-doing-so-far/

It is quite disconcerting that small businesses are floundering with the weight of their anticipated responsbilities and need to seek help from a suitable advisor eg book keeper, accountant although research shows that many such advisors are not up to speed on what needs to happen.  

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By gary.ging
15th Jan 2014 15:49

re: Sage Support

Hi Moonbeam,

Would it be possible for you to sendan email to [email protected] with the questions you have regarding the pension module, please? We'll make sure that they get answered as soon as possible.

Regards

Gary

Sage (UK) Ltd

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By cirruspilot
16th Jan 2014 11:25

Sage Module

As a AE adviser I am amazed that Sage should be selling this module as a complete answer to the employers responsibilities, it may connect pay role with a diary system to churn out the correct letters to the right people at the right time, but it will not help employers choose the correct pension scheme  nor will it reduce the amount of work required each month it will just add to it. 

Salary sacrifice arrangements should be used to both reduce costs and offer sweeters to the employees such as bicycle to work, child care vouchers etc Sage will not offer this functionality as I understand it. All would help reduce the overall financial impact of AE to the employer.

Most employers will require some sort of automated middleware that will connect payroll to pension scheme, whilst offering a completely compliant set of templates, calculators, Salary sacrifice and document storing facility to save all copies and process for 6 years in case of investigation.

It has been calculated that for those employers who do try to go it alone, AE will add at least 3 full days of additional work and create a situation where, whoever is dealing with AE for the employer, be it HR or payroll or the director himself, they will start spending more and more time on pension enquiries from staff which could lead to both miss-information and claims against the employer in the future.

Employers should be talking to Pension advisers sooner rather than later to get the full picture. Most Pension providers are now demanding at least 6 months notice before staging date to consider taking a new scheme on and they are getting  very particular about who they will take on.

 

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By cirruspilot
16th Jan 2014 11:39

Middleware

I forgot to mention in my last post that there is middleware available that just needs 4 buttons to press each month to handle all AE issues payments reconciliations etc, so little if any training will be required, thus saving time and money for all concerned. interested parties let me know [email protected]

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By AllanLMaxwell
16th Jan 2014 12:01

Sage is a payroll solution not an Auto-enrolment solution

Reading the comments above it seems clear to me, as an adviser who specialises in Auto-enrolment, that there is misconception about what Sage can actually do on Auto-enrolment.  Sage is a payroll tool which requires a set of rules on which to operate.  These rules must first of all be defined by the user.  As the user you have to understand how you wish to deal with Auto-enrolment then configure Sage to deal with it.

Depending on your point of view Auto-enrolment legislation is wonderfully/un-necessarily complicated.  Employers who are seeking to deal with these new rules without taking advice are therefore running the risk of falling foul of the regulations and spending time and effort in unproductive areas of their business.  That's not to say that you can't do it yourself just if you do be careful.

Employers should also be aware that the payroll side is only half of the issue.  A large communication exercise is also required to inform your employees about the new pension scheme that you have set up for them.

As you might expect I'd be happy to talk to anyone who wants more information and guidance. 

 

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By kross
16th Jan 2014 18:20

Payroll & AE

I endorse the comments of Alan Maxwell in that companies would be foolish to start the AE process without taking appropriate advice from a Pensions Advisor and for the record I'm not one nor do I have links to any.

I also agree that Payroll software is just that, it is not a pensions admin system and both are required, so whatever the merits of Sage or other payroll suppliers they can only impact part of the whole issue.

It seems to me there is a danger of companies focussing on the official Staging Date without understanding the lengthy lead in time required to prepare a scheme that is AE compliant. A minimum of 6 months and more likely 9+ months should be allowed before the Staging Date is reached. The Pensions Regulator is not going to be pleased with companies that miss their Go Live date just because they were late starting the process.

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By finegana
16th Jan 2014 20:38

AE and advice

There's no dispute from me in terms of advice, we've had our preferred IFA's talking to clients for the past 12 months. Introductions have been done, schemes are being setup in accordance with individual needs.  Our part in this triangle is Payroll, hence the need for an understanding of Sage functionality.

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By Moonbeam
17th Jan 2014 07:22

Thanks Gary.ging

I was out yesterday.

I will compose an email as you have suggested.

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By abelljms
25th Jan 2014 10:35

auto pens

 

 

 

fundamentally small businesses are NOT interested, zzzzzzzzzzzzzz

It's just more government coblas gluing the wheels of commerce, instead of them giving us some oil.

why are politicians soooooo stupid?

when we are forced to activate we will do it because it's the law, but that won't make us "interested"

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By cirruspilot
27th Jan 2014 11:48

abelljms

You are so right, but if you have the right proposition, as an adviser to small businesses you can help them and be paid to keep them on the straight and narrow.  it is possible to generate a regular passive income by getting involved in handling the compliance side of A-E . You do not have to be a pensions adviser to do this.

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Replying to Justin Bryant:
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By abelljms
27th Jan 2014 14:55

auto overheads
can't think of one of my clients being willing to pay me a € or £ for this junk,

AND today is the day when the PM 'lies' to press about how many pointless regs his civil servants 'lie' to him they have binned since he moved in - it's all fantasy tearing of stats - nothing of any importance on the ground for small business.

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By cirruspilot
27th Jan 2014 17:10

abelljms,

Sorry to here that, as employers are paying me, whether the idea is right or not they have to do A-E so we will help them and be paid for it.

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By Moonbeam
29th Jan 2014 17:05

Auto enrolment and Sage continued

I didn't have time to email Sage about the unanswered questions I had on the auto enrolment product. Having thought about the matter further, there is so much I don't know about this module that telephone support is the best way for me to save time. It's hard to be precise in an email when you don't understand the way the program's been written.

I should say that I spoke to 2 excellent payroll helpline staff earlier this week, and assume some of them have either done more training or have benefitted by all the questions they've had to field from people like me. I got a really good response from both of them.

It's a real statement of what the government's putting us all through that Sage has decided (rightly, in my opinion) that it has to have its cleverest staff on hand for this most complicated process.

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Karen Bennett
By Karen Bennett
20th Jan 2015 11:30

Communicate with Payroll Clients

There's little doubt that a large portion of these small employers will look for advice close to or even after their staging dates. Bureaus need to start communicating with their payroll clients informing them about their Auto Enrolment duties. There is a unique opportunity to offer AE as a chargeable service.

 

I recently published an article on Accounting web called Auto Enrolment - Five Strategic Steps to Bureau Profitability.

 

As the comments suggest above some payroll providers are charging extra for AE features or modules and support. AE payroll features should be easy to use when it comes to these employer admin tasks including the task of employee communication. The whole area of Auto Enrolment is complicated enough without problems with payroll software adding to the list.

 

BrightPay payroll includes AE and includes email & phone support for free.

Karen @ BrightPay

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