This week and for weeks to come , I am out and about talking with the payroll partners of large accountancy practices who feel they have no choice but to help their employer clients through auto-enrolment.
I’m doing this work as a guest of Star payroll solutions and the accountants are using Star’s software to help employers stay compliant with auto-enrolment regulations. I am co-presenting with the Pensions Regulator and with Star’s key strategist Howard Hoddell.
It is clear that accountants get auto-enrolment compliance and they understand the capacity crunch, at least in terms of demand from employers exceeding supply of third party support. The accountants I am speaking to are stepping to the plate with intent.
“Workie” – yes! But which Workie?
But when it comes to helping their clients to a workplace pension , they are at sea. Payroll compliance is a core function of many accountancy practices but pensions advice most certainly isn’t.
For decades, the accountancy profession has been taught polarisation- either you are a regulated financial adviser or you stay out of financial advice. It is a surprise to many that advice to employers on “Workie” (workplace pensions) is an unregulated activity.
Even where accountants can see past the regulatory risk, the prospect of civil claims from disgruntled employers (prompted by disgruntled staff) makes the commercial risk of advising on pensions – a service too far.
Not all Workies are the same!
I have listened to the Regulator explaining the process of choice to accountants and I have to say, they have not been impressed. Signposting accountants to the Association of British Insurers membership list or the list of mastertrusts that have paid for PQM ready or MAF accreditation is not cutting the mustard.
Accountants want guidance from the Regulator on how to make sure the Workie their client uses – works for their client.
They can read our Pension Minister warning employers of the need to choose the right Workie (yesterday at a TUC conference)
They can read the Pension Regulator warning against the proliferation of under-reglateed Workies in the FT.
Even financial advisers are warning against vertically integrated Workies with no provenance, or obvious raison d’etre.
They read the warnings on the Regulator’s website about not using net pay schemes where there is a danger of low-paid employers being enrolled without tax-relief, but there is no list of providers who operate under net pay.
Indeed, two of the super-promoted providers – NOW and Wellness- operate “net pay only”.
Absurdly , one of the leading relief at source providers- Legal & General, can’t be accessed from tPR’s website for its “relief at source”product, but can be (using the PLSA link) for its net pay (master trust) solution.
Why is the Pension Regulator in such a mess on this?
The Regulator might reasonably have expected that by now, a definitive comparison website would have emerged that would have taken the burden of choice from the accountant and taken responsibility for employer decision making upon itself.
The Regulator might reasonably have expected, with all the noise about Fintech Robo-Advice solutions that a low-cost solution might have emerged that used the new technologies to deliver a quick answer based on the client’s specific requirements.
The Regulator might have expected such a service to have been delivered by one of the major pension consultancies with the validation of actuaries governed by their strict code.
Let’s hope they find an answer soon!
I am not averse to using my blog to promote myself or the solutions that I represent. But on this occasion, I will fight shy.
Disruptive measures – such as auto enrolment -need disruptive solutions. The idea that a Government pensions initiative can be delivered by payroll is disruptive in itself. To leave payroll to get to grips with pensions without proper guidance either from the Regulator of from the private sector, is tantamount to dereliction of duty.
A disruptive solution to the problem of choosing a pension is needed and if the Pension Regulator is expecting it to be delivered by the ABI or PLSA or ICAEW or even the FCA, they will wait in vain. The Pension Regulator says it is committed to embracing innovation but actions speak louder than words. Auto-enrolment is no longer in the planning stage, AE is in A&E and needs these solutions now!
I urge the Regulator and Government to accept that the solutions of the future will be forged from the digital smithies of Hoxton and Farringdon, not the sentinels of pension proprietary in the City. It will be start-ups with the agility to deal with new problems who will deliver the goods.
The Pensions Regulator can either accept innovation or it can side with the ABI/PLSA and ICAEW continuum. Currently it is placing its trust in the past and the past is not delivering.
How hard can it be to get proper information on a workplace pension? As hard or easy as this?