Today I spent the entire morning hidden away in the company of auto enrolment experts…. Its almost as though there is a theme building in this blog. Anyway, there were some great speakers and presentations, thankfully nothing was terribly surprising, other than perhaps the candour. As I had outlined here previously, the real issues have little to do with pensions and everything to do with compliant processes and systems that work.
34 and counting…
Reliance on a payroll system may be misplaced (its not easy to tell) but one major pension provider outlined that there are 34 data fields required for each employee…can you think of 34 questions about your staff? Name, date of birth, NI number, salary, home address, email address, contribution rate…. And so on. There was no denying the importance of accurate and correct data and of course this needs proper checking and policing for security – involving your IT department or if you don’t have one… your IT person/supplier etc.
Concern about loss of pension allowance protection
My only real concern was in relation to lifetime allowance protection, after all payments into a new pension (such as auto enrolment) will, (under current rules) undo any pension protection. The thing is that employers are not permitted to advise staff not to join the auto enrolment scheme and indeed most financial advisers aren’t either due to a quirk in the rules which prevents anyone that does not hold G60 (an exam that can no longer be taken) from advising people not to join an employers pension. Yes, its daft and everyone seems to be relying on HMRC providing some sort of exemption or providing the advice themselves…. Yet here we are with lots of firms with auto enrolment already under way… now call me a cynic, but waiting for the right thing to be done seems unrealistic and naïve.
One of the good things about today was that many, well most, employers are actually pretty keen on providing staff with a pension. Yes there are some that seem to think it won’t happen (good luck with the fines) and as one commentator put it, there will be 100% take up, because 100% of employers have to offer and run a scheme, some (about 10%) of the staff will opt out, but even if 99% opted out, the rules must still be adhered to. So… better get on with it. Here is a little video about AE from a SME… yes the jargon is now in full flow! thanks to Standard Life.