Auto Enrolment – should I take advice?

As the auto enrolment legislation turns its attention to the smaller employers, the question of whether advice on the choice of provider is necessary has never been more relevant.

There has certainly been a shift towards employers opting for support in respect of auto enrolment compliance with a provider on a non advised basis. This may be a viable option however it is important employers are fully aware of the difference in the schemes available and the relevant benefits that may be foregone when proceeding with the non advised route.

Compliance is King

It could be argued that many employers simply require a low cost compliant solution for auto enrolment which will ensure they avoid any penalties from The Pensions Regulator (TPR). In this case, providing the pension provider meets the auto enrolment criteria, many employers are happy to choose the most affordable pension provider on the market and keep costs to a minimum. Many financial professionals now recognise this requirement and have subsequently developed a simplified Auto Enrolment Service which seeks to assist employers to comply with the legislation on a non advised basis.

What value can advice add?

As seen above, compliance is a central priority for many, however, the value of receiving advice on the choice of pension scheme is often overlooked and this still applies in the current auto enrolment market. Employers who choose to engage in a fully advised auto enrolment support service will ensure they receive a pension provider that is harmonized with their key objectives and existing processes.

Employers have the option of engaging with advisers who aim to source the best possible terms available in the pension scheme marketplace taking into consideration the fundamental objectives of the employer.

Things to consider

When choosing a pension provider, it is important employers are aware that some providers have sought to streamline their auto enrolment service resulting in reduced support for the employer from the provider on day to day activities within the scheme. This can lead to added time constraints for the employer who may be left to carry out duties themselves rather than their provider doing this on their behalf. Good examples of this are support in respect of scheme certification and the declaration of compliance.

In addition to this, the introduction of pensions freedom, effective from April 2015, has given the population food for thought in terms of how they can take their pension benefits. Unfortunately, as it stands, not all pension schemes available can provide the full flexibility required for members to take advantage of the pensions freedom changes which, from an employees point of view, would be a significant disadvantage.

Using their expertise and knowledge of the marketplace, pension and payroll advisers can look to source a provider that is most suited to the employers needs. This service can help offset the issues outlined above and ultimately deliver a more desirable outcome for the employer in the long term.

Summary

Taking the above into account, there is no right or wrong answer in respect of whether an employer should seek the assistance of an adviser to source a suitable auto enrolment provider. However, it is important that employers fully understand the key considerations needed when choosing a pension provider and whether they are comfortable making this decision on their own. Getting it wrong could be a costly experience for the employer as The Pensions Regulator is already imposing fines for non-compliance.