This morning I have been to an appointment with a small employer who has received the 12 month letter from The Pensions Regulator. He is now actively looking for an adviser to set up a suitable pension scheme in time to meet his statutory completion date.
It would be fair to say that all he wants is for it to be done, dusted and cheap, as otherwise it will be a thief of his time and a serious distraction from running the business. He is approaching three sets of advisory firms for quotes and is hoping to make a decision before the end of the month.
For us as a fee-based adviser, producing a quote is a straightforward process, but making sure it is compared on a like for like basis is more complicated. Making Auto-Enrolment work for all the parties involved has more to do with building a robust system than basic pension advice. As independent financial advisers, we are duty bound to select the most appropriate pension scheme for the employer, but for it to work properly for years to come requires a look at wider priorities.
For an employer who has an internal payroll system and one or more skilled staff to run it, an auto-enrolment scheme with little employer “hand-holding” and basic data import facilities will do, assuming that their internal system is up to scratch. Where the employer has outsourced the payroll, the cost of any additional processing and defining how the relevant information gets passed becomes more important.
The biggest issues that is likely to come from a project to set up and run an auto-enrolment scheme is the long-term record keeping and the regular assessment of the workforce. The “elephant in the room” for auto-enrolment is the enrolment of staff coming of age, getting paid over the threshold and the 3 year re-enrolment of those who opted out during the previous cycle. Anything less than a fully robust system exposes the employer, (and the various advisers), to potential censure, automatic fines, adverse publicity, much larger fines and ultimately imprisonment, if you are determined to ignore it!
The advice process for us will include consideration of the business objectives, over and above compliance of the law; the possible use of salary sacrifice, enhancement of employee benefits for motivation or retention; the charge structure for the employer; the impact of the charging structure on the employee’s pension pot; the long term performance of the invested funds and the overall ease of administration.
Where necessary, we will train up the staff to operate the system and check the process at several stages to make sure that all is running satisfactorily. No one benefits from only half a system and doing it properly once is easier that having to do it several times under the watchful eyes of The Pensions Regulator.
If you would like to know more about how we can help you plan and realise your financial goals then contact us at firstname.lastname@example.org or call us on 01223 792 196.
The information contained is for guidance only and does not constitute financial advice. It is based on our understanding of UK legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly no responsibility can be assumed by Martin-Redman Partners its officers or employees, for any loss in connection with the content hereof and any such action or inaction.