Thank RBS for a Pension and Payroll lesson .


“WE ARE SAVING THROUGH PAYROLL SAVINGS” – NARA – 516067 (Photo credit: Wikipedia)

The last few days have not been good for those relying on RBS – be it their own , their employers’ or of their creditors’ RBS bank account.

We have become reliant on our banking system and as Robert Peston put it

“for banks – this is as bad as it gets”.

That the problem is a result of a software glitch is of no comfort at all to people whose credit ratings are in peril and in the short-term are struggling to find the money to get to work or do the shopping.

Those of us working in pensions generally know little about the back office processes of banks – or of payrolls for that matter.

Payrolls touch upon our work, we may even run payrolls for our pensioners but the complexities that surround payroll deductions and Real Time Information to HMRC are none of our business.

I’ve used the phrase “that’s a payroll issue” myself, and done so far too often. It implies a mechanical solution established by software engineers in geekland -none of my business.

All the clever ideas we pension people have come up with over the years have created “payroll issues”;-  salary exchange, matching, age and service -related contributions….to name but the more common.

But the imposition we have so far created on payroll engineer’s time is as nothing compared to the challenge we are throwing down from auto-enrolment.

I say “we”, as I don’t think that I saw many payroll people in the consultation meetings with the DWP I attended. It looks like the DWP ,providers, advisers and managers all sighed “that’s a payroll issue!”

The RBS fiasco tells us that when we upgrade software and run sequential changes afterwards, we are taking an enormous risk. The chance of that risk biting may be small (bankers call these “black swan events”), but the consequences are , as we are seeing this week, disastrous.

I expect that there are strategists at RBS who  sanctioned the software upgrade who had similar confidence that because nothing had ever gone wrong , nothing ever could.

Quite rightly , fingers are being pointed at Stephen Hester (see blogs passim on the responsibility you take for your pay package).

We need leadership in pensions, to make sure that we anticipate and avoid the complex payroll problems thrown up by auto-enrolement . Dismissing  these problems as “payroll issues” is not responsible and does not show leadership, but it’s what I’m hearing from many people in the pension industry.

Next Tuesday, we (First Actuarial) are sitting down with a group of senior payroll software providers under the auspices of Payroll World with some simple messages.

  1. We know how concerned you are about auto-enrolment
  2. We know you have been working flat-out on Real Time Information issues
  3. We know you feel threatened by pension providers and advisers with middleware solutions
  4. We want to help not point the finger

I’m going to point out that this is a pension  problem and we intend to be a part of the resolution. This is not an altruistic acton our parts. If our clients cannot comply with auto-enrolement or if things go wrong as they have with RBS and members find themselves with the wrong amounts in their pay-packets, I expect pensions people to stand up and accept they are part of the problem.

For most companies auto-enrolement is some years away, but the companies that are staging in 2012 and 2013 employ a high proportion of the UK workforce. Some are on top of the problem, most, according to all available data, are at best hoping they are, some clearly aren’t.

It only took one RBS fiasco and it needs only take one major payroll failure. Which is why you can expect to hear a lot more “get yourselves ready” messages on here over the next couple of years.

The earliest staging date for auto-enrolment is infact this Sunday (July 1st). I don’t believe that any of the October stagers have taken the opportunity to go three months early but it focusses the ming.

Auto-Enrolement is  literally “tomorrow’s problem”.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in auto-enrolment, Bankers, Financial Education, Management, NEST, pensions, RBS and tagged , , , , , , , . Bookmark the permalink.

7 Responses to Thank RBS for a Pension and Payroll lesson .

  1. Henry, I really like your analogy, and a well thought out piece, with empathy and realism around many Pensions Professionals lack of awareness, as to how many projects Payroll are tackling ongoing. We’re not alone in a world of complexity, most professions have managed to either wrap themselves up in it!

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  7. digiclay says:

    heyy really lik ur post .,. i m tottly impresed..
    Payroll Software Indore

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