Payroll leads- Pensions follow.


I have been writing for a few years about the value shift from actuarial to operational, in pension consultancy.

I also predicted that it would be payroll that would do the heavy lifting on auto-enrolment.

I was right on both counts. But I did not expect either the wholesale collapse of defined benefit pension provision or the near unanimous take-up of auto-enrolment accross the employment spectrum.

Payroll is at the heart of the shift we have made from defined benefit to defined contribution consultancy. Almost every aspect of defined contribution pensions is a function of payroll, from flex and salary sacrifice to the fiendishly complicated rules surrounding auto-enrolment.

As usual, the implementation of this work has gone unrecognised by many who work in pension consultancy who are focussing on abstractions such as the optimal default investment strategy.

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The picture shows my colleague First Actuarial’s  David Joy talking with at the CIPP tutor training event on a summer Saturday in the East Midlands. Here payroll professionals were learning how to talk with staff about the things that staff really need to know. They need to know about how tax and national insurance works, how not to be a muppet when they come to spend their pension savings and how much a Pizza will cost in twenty years time (the Dominoes effect).

This practical work , which helps staff to understand their new responsibilities for organising their post retirement finances was something that every person in the room got excited about. That’s because payroll people are on the frontline when it comes to answering member queries. We call this work financial eduction and we know it works in the workplace. Work is boring- pensions are boring – there’s a fit there!

We think it right that the CIPP are picking up on this. After all – you used to have pensions in your name! We also think it proper that you own the Friends of Auto-enrolment, an organisation that has done much to promote auto-enrolment as a positive – and not just an “employer duty”.

Talking of which, the summer has also seen the mighty Sage step up to the pension plate with their “Be a Pension Hero” initiative. Interestingly Sage have named their auto-enrolment functionality the “pension module” and rather than leave their employers guessing at what pension to choose for their staff, they’ve employed the Pension PlayPen to provide employers with clear guidance and a certificate from a leading firm of actuaries (you’ll never guess which one!).

It’s a major step from one of our largest companies. Now that ARM Holdings is being purchased by SoftBank, Sage is Britain’s biggest Technology company. Many payroll and HR outfits such as Oracle and SAP have hardly touched auto-enrolment. It’s interesting to understand why Sage are different.

It comes down to timing, size and business focus. Sage have timed their run to pensions nicely, we are now in the middle of the biggest pension challenge ever to hit SMEs , Sage are the big boys in servicing the software needs of the SME community . Their commitment to pensions is as clear a sign as any of the shift in the pension power base, I talked about at the beginning of this article.

But what will this mean to payroll professionals – the people who read this magazine? Whether you work in-house for a large employer or manage tens and hundreds of small payrolls in a bureau, you matter. You matter much more than the “worthies” at organisations such as the PLSA and PMI can imagine.

You are the doers. Maybe you don’t have the high faultin letters after your names but it’s payroll that people trust (and not pensions). I have devoted a large part of my time lately to restoring confidence in pensions. I have had my efforts  richly repaid by the payroll community which has embraced the need to engage, educate and empower staff and taken up the gauntlet of auto-enrolment.

I don’t want your reward to be in heaven, I want you recognised for the great job you are doing. I’ll do all that I can, and so with those who work with me, to make sure that the CIPP and its members get valued.

Where Payroll leads, Pensions follow.




About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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