So far, experience has shown a significant number of accountants are not wanting to get involved when it comes to automatic enrolment. Many don't see it as being lucrative, and - so far - it just hasn't been top-of-mind for the average accountant.
Most have only had one or two clients stage but this has often been managed by an IFA or they have in-house expertise. However, with one third of their client bank likely to be staging in 2016, accountants are now looking to have a more definitive process in place.
No ‘tidal wave’
Almost 100,000 companies need to meet their duties in the first quarter of the year, and The Pensions Regulator (TPR) won't know for certain about those companies that failed to comply until around five months later - so well into the summer months.
I don't expect to see a 'tidal wave' of enquiries and companies complying in the early part of 2016, as many have predicted. I suspect many will ignore their duties and fail to get advice. Despite the efforts of TPR and their accountant sending them a letter or two, most companies will ignore this correspondence and it won’t be until five months later they get a reminder to comply from the regulator and the threat of a fine. Hence, I can see a large number of the February and March stagers coming online later in the year around July/August time - when the fines are due to hit.
Company owners ‘switching off’
The threat of a £400 fine may have a big impact on cash flow for some micro businesses; for others it’s no more than a long lunch! The threat of the daily fine will definitely get people’s attention, but is it enough to get them to do it on time? For many I am guessing it won’t be.
Much of the advertising (of Workie – who I like by the way) is on TV. How many small business owners have time to watch TV? Any TV they do watch tends to be pre-recorded and so they fast forward the adverts. I hope Workie starts playing a bigger role online and through other media than just TV in order to appeal to the business owners.
Master trusts – Consolidation
Last year, we read about a lot of advice firms setting up small master trusts to support their clients (and new ones) through automatic enrolment. But, I struggle to see them achieving scale and making it work? When they decide to pull out of the market, where will this leave those who invested? I strongly suspect we'll see consolidation during 2016.
Tips for getting ahead with automatic enrolment
- Get ahead now - start planning. Do as much as you can in advance of your staging date. You can set up your pension way in advance without having to make any contributions until your staging date.
- This gives you enough time to get your payroll data ready, this bit is often the tricky part.
- Automatic enrolment can be straightforward if you have simple circumstances. But there is still quite a lot of new language to get your head around. If you’re a bit more complicated talk to people, there is plenty of information and help available.
By Matthew Mitten, Director, Enrolsme