WHAT does pensions auto-enrolment mean to you? Is it a headache that could potentially erode your firm’s profit margins as you devote increasing resources to helping payroll clients struggling to navigate its complexities? Or could it be an opportunity to add value to your services, strengthen client relationships, and enhance market share?
One thing’s for certain – for employers and their accountants at least, pensions auto-enrolment is not simply about pensions. The real issue here is payroll processes, and advisers are coming under increasing pressure from clients for guidance and support.
For many clients, finding a suitable scheme, making sure that the right employees are enrolled at the right time and not forgetting the issuing of the appropriate statutory communication within the legal timeframe are no easy tasks.
Where you have a straightforward payroll, with no movement in salary levels or headcount may not present too much of a problem once enrolment has taken place. However, what of those clients who have shift or timesheet-based staff whose earnings vary month to month, employees doing unforeseen overtime to meet a surge in demand, younger workers crossing the minimum age threshold, new joiners – all these variables need to be factored in well in advance and processes put in place to deal with them.
If they don’t, the consequences could be severe – failure to meet their responsibilities could land businesses with hefty regulatory fines, damage staff relationships or potentially face a visit from The Pensions Regulator. This is a burden that most clients could well do without and they will be looking to their advisers to take it off their hands.
Decision-making time for advisers
For accountancy firms this raises the question: do we really want to do this?
If not, there’s a very real risk of losing business. With payroll services increasingly seen as a commodity, client loyalty may be weak. Virtual online payroll providers already threatening traditional accountancy firms’ market share are seeing pensions auto-enrolment as a chance for even more of a land-grab. Once a client takes their payroll work elsewhere, other services may follow.
So for many, the answer is: we have to. But how can we make it pay? What kind of support should we be offering to clients and what solutions are available to help us keep costs down, but at the same time justify why there should be a fee increase, maximise efficiency and enhance customer service?
Having worked with many accountancy firms and their clients to develop auto-enrolment strategies and tools, in our view there are five key points firms should consider:
Analyse the client portfolio – assess which clients are affected and when their specific staging date will be, given that this is now based on PAYE reference number rather than company headcount. Establish a protocol for conducting ongoing Staging Date reviews, so that systems are in place to identify new payroll clients and their relevant Staging Date.
Decide what your default solution/service will be – While accountants will still need to upload files and input some data manually, whatever solution is adopted, many of the necessary processes and procedures can and should be automated – for instance, by choosing systems which can issue statutory communication notices automatically or that provide seamless interfaces with pension providers. Not only will this be less time-consuming and more efficient, the risk of human error will also be reduced.
You may want to investigate the pros and cons of “bolt-ons” to your existing payroll software packages, versus specifically designed online auto-enrolment solutions which provide end-to-end functionality or even bespoke packages developed for clients’ own individual needs. One of the benefits of the last two options is that they can be paid for by the client directly, while the cost of adding functionality to your firm’s existing software will need to be borne by the firm and passed on through fee increases.
Whatever option you choose, you need to (a) road test this to ensure it fits with your current payroll software and (b) decide on what fees you are going to charge to the client for this ongoing work.
Develop a marketing strategy – help clients understand their duties under Auto Enrolment. Plus explain clearly to them what your firm’s strategy is to help them prepare for and manage their new responsibilities and decide on which tools you will use to make the process as easy as possible. Only when clients are well informed of what their responsibilities are, and understand the additional task involved in dealing with this extra work can a fee increase be justified.
Provide support through education and training – Offering clients access to seminars, webinars or small group Q&A sessions, can build real kudos. Consider partnering with a trusted third party expert, which may be more cost-effective and less resource-intensive than doing this in-house. Also upskill practice staff to equip them to deal with clients’ evolving needs and the software tools they will be using.
Pensions auto-enrolment can be a complex area for companies of all sizes, particularly SMEs without dedicated internal HR or payroll teams. Guiding clients through the process and providing them with solutions is vital to underpinning and strengthening business relationships.
The challenge for accountants is to do this in a way which boosts profitability rather than eat away at it, working smarter by utilising efficient technologies and developing strategic links with key partners. If they can do this, they will be able to turn a threat into an opportunity, adding real value and setting themselves apart from the competition. So are you in or are you out?
Paul Mitchell is director, corporate solutions, at Wren Sterling
Study commissioned by the AAT and ACCA reveals MPs' views on Brexit and the accountancy profession
Nasar Zamir of Congruent discusses the RBS complaints process for GRG losses and how specialist guidance can best support a claim
The Practitioner deals with the inconvenience of being a witness, and the January tax return deadline
Richard Kateley of Legal & General discusses how accountants can help clients to prepare for the unexpected with business protection