Every Accountant in the UK will be aware of Auto Enrolment but many may not fully appreciate the impact it will have on the daily operation of their practice.
This article aims to highlight the facts about AE to help Accountants meet the challenge it brings.
Recent surveys suggest that 92% of small business owners expect their Accountant to help them with their AE.
The majority of Accountants haven’t felt the real impact of AE yet because:
- Businesses who have already staged were large enough to deal with AE in house
- The client profile of the majority of Accountants is businesses with under 30 employees
- Businesses with under 30 employees haven’t started staging yet
Ok you say, so tell me something new!
Well, what’s new is The Pension Regulator’s attempt to spur businesses into action.
Firstly, they have started a regime of imposing fines for non-compliance. 166 firms were prosecuted in the last quarter of 2014 and industry commentators predict that this only the tip of the iceberg as AE starts to effect small and micro businesses.
Secondly, they have started sending businesses a very robust notification letter a year in advance of their staging date which requires notification of appointed AE representatives within three months of the notification. Businesses can no longer wait until their staging date to make decisions about AE.
If we examine these facts we can start to predict what will happen in Accountancy practices up and down the country:
- From March 2015 we will see volumes of clients contacting their Accountant to request help with their AE solution (see graph below)
Graph showing staging dates
N.B Look back twelve months from staging date to see the volume of businesses that will be receiving TPR notices i.e. in August 2015, 70,000 businesses will receive their TPR notification letter.
- This volume of telephone calls will adversely affect practices
- Many small clients will not have the wherewithal to negotiate some of the complex DIY AE offerings and will need advice from their Accountant
- The TPR will use the media to increase awareness of the penalties of non-compliance, increasing again the number of client calls to their Accountant
- A number of clients will leave AE until the last minute and expect their Accountant to sort it out for them
So, we can see that AE could potentially have quite an adverse effect on Accountancy practices but what can you do about it?
Doing nothing to prepare for AE will create ongoing disruption in your practice. Your clients will expect you to have the answers and will contact you for help. They may even assume that you are sorting it out for them and won’t realise that they need to do anything which will lead to fines for non-compliance and affect your client relationship.
Refer clients to one of the DIY providers
You could simply refer your clients to Nest or one of the other DIY providers but this will require them to make complex decisions about their AE solution which could lead to the following;
- They might get confused about their options and come back to you for help (have you tried to work through Nest yourself? It’s not as straightforward as it first appears!)
- They may start to set up their AE solution and then be put off by the complexity of the process and give up, incurring financial penalties
- They may seek advice from another Accountant who is better informed and able to assist with AE
These are all unsatisfactory conclusions and will serve to unsettle your relationship with the client.
We would therefore strongly recommend that you adopt the following approach to help your clients with AE:
1 Create a Communication Strategy
The best way to combat reactivity is with proactivity, so let’s look at what can be done to deal with this issue.
Get in front of the game by creating a communication strategy that includes:
1 Establishing when your clients will be staging http://www.thepensionsregulator.gov.uk/employers/what-is-my-staging-date.aspx
2 Communicating with them in advance of them receiving the letter from TPR (12 months before staging date). Explain what the letter is about, what it means for them and what they need to do about it
3 Booking telephone calls in with your clients to discuss their AE solution
4 Keeping a record of communication so you know when your clients are approaching staging and can make sure they have taken all the required actions
2 Offer a Robust Solution
Your clients will expect you to provide a solution to AE. This includes your non-payroll clients who will still need advice on what they need to do in-house.
They consider this part of your role as their adviser on all matters relating to financial compliance.
So, you need to have a solution in place at least 12 months before your first client is due to stage.
The Good News?
We can help
We have a robust, simple, fully automated, fully compliant AE solution that covers both payroll and non-payroll clients.
Enrolex not only provides a completely free AE solution but also manages your client communication strategy, as outlined above, so you can get on with running your practice.
For more information check out Enrolex