Almost half of accountants admit to not knowing enough about auto-enrolment despite nearly two-thirds of SMEs turning to their accountants for advice about the pension legislation.
A report by employee benefits adviser Helm Godfrey has raised concerns over the lack of auto-enrolment knowledge among accountants, warning that the knowledge gap puts SMEs at risk of ending up with unsuitable pension schemes.
The report, which aims to provide guidance to accountants and SMEs on navigating the auto-enrolment process, found that 43% of accountants surveyed admitted to an auto-enrolment knowledge gap being their own biggest challenge when it came to advising businesses.
It added that 41% said they had difficulty navigating the detail of auto-enrolment while 32% said they had concerns about finding the right advice for clients.
Over half (56%) of accountants surveyed said they are telling all SMEs to choose the government’s National Employment Savings Trust (NEST) scheme, without apparently researching whether this would be the best option for them.
The report highlighted research by NEST which found that almost three quarters (74%) of small businesses will turn to an adviser for help with auto-enrolment, of which 59% would choose their accountant, rising to 70% for employers with four or fewer staff.
Helm Godfrey urged accountants to brace themselves for a surge in enquiries from employers as tens of thousands of small businesses, which make up more than 99.9% of the UK’s private sector, are due to begin implementing the pension reforms.
Steve Wood, head of auto-enrolment for Helm Godfrey, said,
“When you consider that the majority of practice-based accountants we interviewed told us that fewer than 25% of their clients have begun the auto-enrolment process, there’s going to be a lot of small businesses coming to accountants for advice in the coming year, but many of them may not be equipped with the specialist knowledge required to provide the advice their clients need.”
According to Helm Godfrey, the administrative burden and complexity of auto enrolment will add an extra 103 workdays for SMEs’ finance and HR staff, meaning it is essential that they receive good advice.
“The complexity and scale of the task means that many small employers are simply going – or being pushed – to NEST or one of the other master trust pension schemes that have been set up to meet the demand for auto-enrolment schemes; often without any consideration for their (or their employees’) particular needs.” Stressing that “one size does not fit all”, Wood added that while accountants might think supposedly “low cost” pension schemes will always be best for their clients, “some low-cost schemes can be time-consuming and/or costly to administer and may not be best value for the employees, depending on the nature and make-up of the work force”.
He recommended that accountants should offer advice on a selection of the most appropriate schemes. He also highlighted the many other areas where choices can or need to be made by employers but advice and guidance on the legislation and options open to them may be in short supply. While 42% of accountants surveyed said they recommend that clients speak to a specialist adviser about auto enrolment, the remaining 58% do not. Wood encouraged accountants to engage with auto-enrolment specialists in order to provide the best possible advice to clients.
“If an accountant doesn’t have the auto-enrolment expertise itself, it makes sense to link up with a company that does, because otherwise their clients may go to someone else,” he said.
“By partnering with a specialist, accountants can remain part of the process, and generate additional income for themselves too. And it’s worth remembering that, with 85% of accountants we spoke to saying they provide payroll services for their clients, they are already – or will be in future – involved in auto enrolment anyway, so they should embrace it and help their clients at the same time.”
Article originally published on www.economia.icaew.com
Petaurum Solutions’ Comment
Complying with complex Auto Enrolment obligations can be a daunting prospect for many small and micro-sized business. Choosing a cost effective, long-term implementation solution is critical for these businesses to ensure they do not become swamped with the processing requirements and responsibilities that Auto Enrolment can bring. Therefore, for businesses considering their solution, focus should not only be on the pension scheme, but also on how it will be administered, methods to communicate, impacts on systems and data collection processes along with any HR and Legal changes may you need to make.
Our Defaqto 5* quality Carey Master Trust Pension Scheme, comes with best in class assessment and communication software and is part of our SME specific, competitively priced end-to-end solution that will take care of the above, leaving you free to manage your business safe in the knowledge that your Auto Enrolment obligations are in professional hands. Want to know more? Then feel free to download our info pack here, or contact us to secure your PAE future.
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