There have been two events over the past couple of weeks that I think we’ll look back to as tipping points in the auto-enrolment staging timeline.
Till now, employers have had no choice but to send and collect data to and from pension providers using CSV files. Not only is this a risky business (think TalkTalk) but it’s manually intensive. If we were to carry on like this, I suspect auto-enrolment would fall over at some point in the next 36 months.
The first breakthrough came when pensionsync announced that they had successfully integrated with Legal and General so that progressive payrolls such as QTAC can now pass encrypted data at a push of a button without the need for messy CSV.
The second breakthrough came yesterday when Sage announced it can now do the same with NEST. Here’s how they describe things in their press release
The innovative functionality, which seamlessly integrates NEST’s new Web Services functionality, will automate all pension interactions for NEST and Sage’s customers, both direct and via accountants, bookkeepers and commercial bureaux.
Moving from a manual process to a ‘one click’ automated tool, the Pensions Data Exchange empowers Sage’s payroll & Pension Module customers to meet important regulatory requirements with greater ease and confidence.
For auto-enrolment, this is like the invention of the telephone 150 years ago – it changes everything!
All the conversations I have with those in payroll managing auto-enrolment suggest that it is the initial and ongoing interface with the pension provider that is eating time. The uploading of CSV files and the reconciliation of data are too time-consuming. With 1.8m more employers to come, the capacity crunch is all about this use of time.
Our initial experience is that moving from CSC to API technology cuts the time taken to manage scheme set up and ongoing contributions by around 80%.
Of course we are at an early stage. But things are really exciting.
Pensionsync already links using the new technology to Pension PlayPen and we are getting data sent every day into our workforce assessment using its and our APIs. We can now integrate seamlessly to L&G using the same technology so setting up a workplace savings plan with that employer is only a click away.
This radically reduces the time needed to assess a workforce, choose a pension and set a scheme up. Within a couple of months we expect a host of other providers to be working with pensionsync in the same way.
In an excellent post on a Pension Play Pen Linked In Group thread, Adam Saunders sums up how the impact for bureaux
For Payroll Bureaux that deal with lots of small employers each of whom have a handful of staff; pensions are often a whole new thing to come to terms with. If the process isn’t automated then it isn’t a ‘bit’ of extra work – it’s multiplying the time involved, and therefore the cost, of processing payroll runs. Bureaux will either shut up shop, refuse smaller clients or increase their costs – there aren’t many other choices. If automation comes in time (although it comes with a price) it may mean that Payroll Bureaux will be able to keep going and keep their costs more or less the same.
The benefit of automation to the employer therefore may be that their relationship with payroll carries on more or less as usual, despite the massive extra workload that payroll is taking on.
Sage customers can of course set up with NEST in seconds and manage data with NEST as easily. Let’s hope that Sage don’t stop there, there are more fish in the sea that NEST -even if NEST is a very big fish. Let’s hope that Sage customers can get the chance to integrate to choice as other providers catch up.
Sage and NEST represent size, size matters, but we have to remember that choice matters too, choice of payroll software, choice of payroll manager and choice of pension provider. Thankfully as well as the Sage and NEST link, this new technology is available to all.
The great thing is that whether supported by the mighty Sage or the smallest software provider, all bureaux can benefit.
Pensionsync is doing it for the smaller players, Sage are probably big enough to build their own interfaces to providers. )NEST you remember didn’t bother integrating to the PAPDIS data standard that is used by pensionsync but many other providers have).
PAPDIS makes life easy for smaller providers and payroll software houses and it’s thanks to Pensions Bib that they will be able to offer a competitive service to the big boys.
So it looks like things are all coming together, thanks to Pensions Bib, the Pension Regulator, and the heroes of payroll.