A recent study into auto-enrolment sign-ups suggests that by 2018 an estimated 63,000 small firms will have been fined for non-compliance if the current rate continues.
While the cost to these on-boarding firms has been estimated to be a whopping £25m in fines alone – there is hope. Advisers. They are the super heroes of the auto-enrolment world.
The Pensions Regulator’s (TPR) own research calculates that 40% of small and micro firms will turn to IFAs, accountants and business advisers for advice and help to comply.
That £400 fine (fixed penalty notice) for small firms that rely on cash flow and prompt payment rather than funding and banks loans to keep their firm afloat – and as such are the ones that can least afford to be shelling out – this is where advisers are needed to step in.
Since we launched our adviser platform, which allows advisers to on-board multiple clients in one sitting, we’ve seen more than 1,000 sign up in just a few weeks.
Because Smart Pension is free for advisers and employers to enrol, and highly automated to function like Duedil, signable, postcode anywhere and Go Cardless, it can make the on-boarding experience a comparative breeze. And that’s proving popular among the adviser community.
It’s clear that some small firms are struggling. Not with coming to terms with their responsibilities, they’ve nailed that. Their issue is that they can’t get over that last hurdle – making the decision around which provider they should choose. And it’s making them miss their staging dates.
We can see them now, head in hands in a darkened room, Google in full pensions search mode – but nothing is standing out. With a gust of wind, and a dramatic flutter of the curtains, an adviser appears, taps a name in the laptop. Job done. Smiley face.
If only life were so simple. With headlines dominated by an animated debate around master trust standards and regulation, it’s a big job even for the most seasoned adviser to cut through the noise.
But there is hope. The recent Queen’s Speech outlined plans to increase the regulatory powers TPR can exercise over master trusts. This is good news for the industry and good news for savers. It should help to categorically reassure advisers that they are pointing their clients towards a good, affordable scheme.
We expect to see TPR’s Master Trust Assurance Framework being made compulsory for all master trusts moving forward. It’s a robust and detailed health check. And we also expect to see more regulation added on top of that to quell any fears around wind-ups etc.
Between now and 2018, 1.8 million smaller employers are set to stage. They haven’t got an HR department, an in-house financial expert and they’ve very likely never set up a workplace pension.
It could be a case of advisers to the rescue.
Will Wynne is co-founder and managing director of Smart Pension
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