With most things in life, it is important to be prepared. Auto-enrolment is no exception. Compliance First's Janice Laing on how to make sure things run as smoothly as possible.
The preparation for auto-enrolment (AE) is now in full swing and 2014 is going to be a very busy year for providers, with many already confirming they will struggle to meet the level of demand they expect.
Most have warned of the ‘2014 spike’: they will reach saturation point very quickly, leaving those employers that have left doing anything until their staging dates at the back of a very long queue.
Doing nothing is not an option for employers. They will be looking for hand holding, both from advisers and from product providers. They will also need time to get to grips with the complex calculations: the fines for non-compliance are extensive and costly.
The ABCs of AE
Most organisations already have existing pension schemes in place and, in the majority of cases, these are likely to be used as qualifying schemes for the existing members with a little bit of ’tinkering’.
With the Department for Work and Pensions (DWP) effectively now banning consultancy charging for AE, we find ourselves in a world of fee-only charging for it. It may be wise to compare with prospective clients an adviser’s fee to that of the fines of The Pensions Regulator (TPR). First, a fixed penalty notice of £400 will apply, then fines by the day, as in the table below, left.
Not only are the product providers going to reach saturation point – there being only so many schemes they can realistically set up and administer in a calendar month – but it is likely the same will apply to an adviser’s time. The graph (right) certainly puts the spike into perspective.
Several adviser firms successfully dealing with AE are offering an “appointment now – while we can guarantee we can see you” approach. So what can you do to make sure things run as smoothly as possible?
Know your clients’ staging dates
The staging date is a key piece of information when planning ahead for AE, as you can work back from the date to plan what preparations need to be made and when.
An employer’s staging date is determined by the number of people in its largest Pay As You Earn (PAYE) scheme, based on the latest data from HM Revenue & Customs held by TPR as at 1 April 2012.
TPR will contact all employers to confirm their staging date but you can look up a client’s information by entering the reference of their largest PAYE scheme into the TPR’s tool. This works best for employers who use only one PAYE scheme for all of their workers.
Understand your clients’ workforce
Whatever your level of involvement, you will need to understand the different types of worker and what defines them, as well as the corresponding employer duties for each. Some types of contracts will require close examination in order to identify where the employer duties lie; for example, for agency workers or contractors.
Making the assessment of a worker is a process that can be automated (for example, through payroll) but TPR has provided links to resources explaining how to make the assessment manually via other processes if this is something you will be involved in, either in an advisory or active capacity.
Caring for children and elderly relatives
Similar to June 2007
Square Mile’s series of informal interviews
Fine reduced to £60,000
Two roles created