Illuminating the auto enrolment market

I’ve recently been out on the road delivering a series of Workplace Academy residential events (they do still happen!) and catching up with advisers who have been prompted by auto enrolment to consider how they offer further services to protect and grow their relationships.

Related topics:  Retirement
Tom Nall
28th October 2016
Tom Nall SimplyBiz
"If you're going to reignite corporate conversations that you’ve previously had, or possibly avoided, then it's worth building on the auto enrolment/re-enrolment conversation by touching on the developments in the group risk market."

Firstly, the topic of auto enrolment. There were delegates at each event who have made a success of AE and, there are those who have partnered with payroll professionals to provide a cross/upsell facility to their clients, offering a mix of employee benefits and business protection. In this article, I want to highlight how advisers that perhaps avoided auto enrolment initially can now generate value by getting ready for re-enrolment for large schemes; and you do need to be ready, because this time next year, employers with 60 staff will already be hitting their re-enrolment date.

So, if you weren’t involved in the original AE wave, a few questions for clients to make sure they are ready for re-enrolment. Firstly, contributions on basic pay are ultimately going to be 8%. Do clients know that they have to complete a self-certification at least every 18 months and, that if their contribution is 8%, then their basic pay must be at least 85% of total earnings across the whole scheme? If basic pay represents anything less than 85% of total pay, the employer needs to be paying contributions on a ‘set 1’ basis, which costs the employer 2% of basic pay, rather than 1%, doubling the costs of auto enrolment to the employer through to April 2018, and there’s a risk that contributions will need to be back-dated.

Secondly, it’s necessary that you adhere to The Pensions Regulator’s definition of what constitutes a worker. Ensure you treat people on, and off, the payroll correctly. In a recent report responding to the DWP’s review into auto enrolment, Sanctum Software found that in over a quarter of cases, there were compliance issues that resulted in employees losing out - exactly what TPR is focused upon. Any client you're working with that uses personal services workers, for example, should check that they're treating workers correctly -as all missed contributions may have to be made - with the employer footing the bill for both the employer and employee. This liability just builds every time workers are paid and not treated correctly, so it can get expensive!

If you're going to reignite corporate conversations that you’ve previously had, or possibly avoided, then it's worth building on the auto enrolment/re-enrolment conversation by touching on the developments in the group risk market. For smaller schemes, or those looking to perhaps reduce costs, flat rate pricing (e.g. £25k or £100k cover for everyone) for schemes with as few as two employees, simplified online application and increased free cover levels for small schemes, mean that clients using individual protection policies can find similar levels of cover in group schemes but with group discounts and no underwriting.

Finally, if you’re having these conversations, you need to check that there’s not going to be any type of lifetime allowance issues with individuals having a workplace death in service benefit written as a registered scheme. It’s a relatively easy, but a highly valuable process to put an excepted scheme in place, or use a relevant life plan to mitigate those lifetime allowance issues.  

Even if your business is all about individual wealth management and planning, it is important to understand how corporate topics can help to protect and grow the value of existing clients and win the trust of other directors in the business. 

More like this
Latest from Property Reporter
Latest from Protection Reporter
CLOSE
Subscribe
to our newsletter

Join a community of over 30,000 intermediaries and keep up-to-date with industry news and upcoming events via our newsletter.