Auto-enrolment: whose job is it anyway?

Over the last few months I’ve spent more time than is probably healthy talking to lawyers, accountants and small business owners about auto-enrolment. With a few notable exceptions what I’ve encountered is very worrying. The Pension Regulator sees lawyers and accountants as the solution to the knowledge gap for the over 1m SMEs to stage by 2017. The trouble is they aren’t experts either, none of us are…..

If you’re part of the payroll team in a typical accountancy practice with a few hundred payroll clients the likelihood is you have but a mere handful where you have ever had any pension involvement and that is probably limited to being give a % or fixed amount to deduct from net pay that the client pays into a personal pension for the directors or senior managers.

If you’re a partner in an accountancy practice I hear a lot of ‘we don’t do pensions’ advice and so this is nothing to do with us’ – well if you offer a payroll service you now do (or will do) pensions big time and in a very different way to deducting an amount from net pay. You need a new fee strategy, letters of engagement, resource to offer a pension service as well as payroll, additional IT expertise. Well I could go on and I frequently have to.

If you’re an employment lawyer this is also new territory, but we’re not talking about the need to become pension lawyers, the legal aspects that the SMEs will need help on include staff handbooks, contracts (creating them for a start would be good for this group), salary sacrifice and training on the employee safeguards for example. These business owners have no HR teams so will hope that their accountants will have alliances with employment lawyers that they can be signposted to.

Nobody is an ‘expert’ in what AE will be like for over 1m SMEs, we don’t even know if we can pull it off yet but what we do need to be is pulling together and not trying to pass this hot potato around and dreading being the ones to be holding it when the music stops. I must say though it would help if the press could get some of the facts right. Yesterday the front page of the Money section of the Sunday Times was about SMEs and AE saying that the thresholds for auto-enrolment were earnings above the personal allowance of £10,600. This is incorrect; the AE trigger was left at £10,000 p.a. for 2015/16 so you get auto-enrolled before you start paying tax which is an important consideration for SMEs working out salary plans for the next two years.