The old high maintenance approach will fall away as pension providers streamline their processes and payroll managers step up to the plate, payroll will be the new pension management.
The extent to which payroll assumes the function of “pension expert” within a company, will vary, but in the absence of an enthusiast in HR or Finance, it will be to payroll that staff and management will turn to to get questions answered and changes implemented. the opportunities for payroll managers to assume a wider and more responsible role within their organisations should be an opportunity (though many payroll managers will see change as a threat).
The resource to which employers can turn for pension advice is and will continue to change. The retail distribution review and the abolition of commission from workplace pensions means that advisers can no longer be paid from your staff’s pension pots. To charge fees, advisers will need to add value. The rise of web-based “help” facilities , especially within the auto-enrolment hubs of payroll software will enable payroll managers to learn their way into being pension experts without reliance on third parties.
If you are reading this and nodding, it’s probably because I’m telling you something you’ve worked out for yourself. It may be that you have already assumed the role of pension manager and you’re just waiting for your job description and for pay and rations to catch up.
If all this sounds a little new and intimidating, don’t worry – the new responsibilities may be yours for the taking but the payroll function is not going to be threatened if you decide pension management is not for you. People will always want to be paid and so long as you are on top of the employer duties outlined on the Pension Regulator’s Website, you have done your bosses a big favour. Where would they be without you?
But think of the opportunities to shine if you could get on top of
- Salary sacrifice/exchange
- Pension tax reliefs
- The new pension freedoms and how Pension Wise works
- Who your staff can talk to on investment matters (not you!)
For years, pension consultants like me have made a handsome living by being a little more expert than the people we advise. But the internet is changing that. Just as doctors are finding patients sourcing remedies for themselves, so we advisers are finding our clients are often as well informed as we are.
This is just as well as there are only just enough of us to go round the large employers with such complicated arrangements that it’s vital they take advice. Many smaller employers, engaging with pensions for the first time, will never have had a pension manager, or a pension adviser for that matter.
I started out thinking that accountants would become the new pension advisers, but now I am not so sure. Most accountants are doing payroll out of sufferance, because if they don’t run a bureau, the firm down the road will. Having to manage auto-enrolment and the pensions issues that come with it, is not high on their strategic wish list.
So whether you work in a bureau, or work inside the employer whose payroll you manage, you are potentially the last line of defence! A recent survey by NEST discovered that payroll now feel they are equally competent to financial advisers on the mechanics of auto-enrolment and a lot more eager to be involved!
I will be writing a regular column in Payroll World over the next few months for payroll people who want to step up to the plate and become – if not pension experts- the people who know just that little bit more about pensions than the boss!
You may think this is blind folly of an adviser but believe you me – it isn’t. Pensions are almost certainly safer in the hands of payroll than being passed around between providers, advisers and barely competent finance and HR managers.
Step up and make their day!
- Many employers will use payroll as the new pension managers
- Managing pensions is as big a job as you want it to be
- Getting advice will need new skill set