You know that feeling when you get to the back of a motorway queue and you see traffic extending into the distance.? If you’re lucky you can see the problem ahead from the blue police lights and as you edge towards the problem, you and your adjacent drivers jockey to get into the one open lane , pass the incident and get back on your way.
Well that’s what it’s going to feel like for 100,000 employers as they approach the end of this year.
For the incident – read the need to onboard auto-enrolment
For the adjacent drivers – read the 100,000 over employers trying to get through the January to March staging window.
For the Police -read the Regulator, doing his best to clear the road , minimise disruption and get people back on their way (albeit with a workplace pension and an auto-enrolment mechanism.
I always breathe in as I squeeze past an incident, I feel squeezed, the first quarter of 2017 is the first great auto-enrolment squeeze.
Switching on the financial sat-nav!
With our financial sat nav on, we at the Pension PlayPen are busy talking with the payroll bureaux, accountants and advisers who will be doing most of the heavy lifting around this period. Everyone says it’s all about payroll and payroll know it. Payroll World gave up the whole of the client conference to debating how payroll could manage the issue.
If payroll are lucky, they will have the help of advisers who can offer employers the hand-holding needed to get the right pension in place – fully integrated into the employer’s payroll and HR processes. But the majority of employers are not going to have this luxury.
In many, perhaps the majority of cases, it will just be the employer talking with the bureau. The expertise will be with the payroll agent, the software to manage the staging process and run the monthly assessments that drive the enrolment and opt-out processes will be provided by the payroll software companies.
Who’s paying attention to the pension?
But there will be no expertise surrounding the decision to choose a pension. Go to the Pension Regulator’s website and you will be taken to this page to Find a Provider . NEST get a mention, as do a couple of IFA directories (not yet the MAS super directory). With so little help about, it is not surprising that many accountancy firms, that do not link with advisers, are talking about defaulting all employers into a single scheme.
And as I have written many times, the employer’s duty is to choose a pension. Choice implies comparison and some kind of intellectual process beyond just being defaulted into a scheme. The implications, should that scheme go wrong, are only too obvious. Defaults don’t reduce risk, they merely defer the risk and- over time – amplify risks.
Technology solutions do exist that allow employers to make informed decisions choosing from a wide range of providers promoting their wares. It is possible for employers to become expert enough in what matters not just to take choices but to record for the future why they took the choice they did. All this is possible digitally, without great expense of time and money.
The Pension Regulator, the software providers, the advisers, the accountants , the payroll bureaux, the employers and even potential staff all know what we know- that the pension decision is hard and for an informed choice to be made, there needs to be a lot of planning and building.
Planning and Building,
We are busy planning processes and building the links between payroll software , the agents who use it and the employers whose staff are paid with it so that the data needed to make the key decisions is available to employers.
Employers should be able to decide on a contribution structure (with or without salary sacrifice), determine what they want from their workplace pension , find out who will offer the pension , decide on the pension and record that decision in a matter of an hour. The cost of such a service should be negligible.
Making it happen
So I’m spending the next few months with the people who are most crucial to Q1 2016, finding ways to make this happen. If you are in the payroll business or are an accountant or a financial adviser and want to help ease the squeeze, please get in touch. We cannot get to everyone in person but we have all the kit in digital format we can send you for trial.
We are talking with the Pension Regulator about how we do this, so at each step we are working within their guidelines and of course we are working with the providers to ensure that this works for them too.
Much is happening in parallel. The work of the CIPP’s Friends of Auto-enrolment (of which I’m National Campaigns Managers), the work of Pensions BIB to create the PAPDIS suite of data standards and the work of great journalists at Payroll World, Accounting Web and the pensions trade press.
To get through 2016 and 2017 we need to be collaborative (as well as competitive). Provided we are moving in the right direction, I do not mind which lane I am in! Provided that we approach the challenges to come with proper regard for those around us, I am sure we will get through.
This is an example of what I referred to over the weekend as ” magic beans and negative capability“, the belief that what “is” now is more than can be seen, it is also what is capable of happening.
That leap of faith is what marks out leadership and in this matter we intend to lead.