Nearly half of accountants admit to auto enrolment knowledge gap ahead of expected surge of enquiries from SMEs
Press Releases | | Helm Godfrey
Almost half of accountants say they do not know enough about auto enrolment, despite being the primary source of advice* sought by small businesses about the pension legislation, a report by employee benefits adviser Helm Godfrey has found.
And with tens of thousands of small businesses, which make up more than 99.9% of the UK’s private sector, due to begin implementing the pension reforms, accountants are being told to brace for a surge in enquiries from employers.
Yet Helm Godfrey is concerned that the knowledge gap among accountants means many smaller companies risk ending up with unsuitable schemes.
Helm Godfrey interviewed accountants for its new report ‘Plugging the Advice Gap: how can accountants help SMEs to auto-enrol?’, which aims to provide guidance to accountants and SMEs on navigating the auto enrolment process.
A key finding was that 43% of accountants admitted to an auto-enrolment knowledge gap being their own biggest challenge when it came to advising businesses.
Steve Wood, Head of Auto Enrolment for Helm Godfrey, said: “When you consider that the majority of practice-based accountants we interviewed told us that fewer than 25% of their clients have begun the auto enrolment process, there’s going to be a lot of small businesses coming to accountants for advice in the coming year, but many of them may not be equipped with the specialist knowledge required to provide the advice their clients need.”
Other findings from the survey included:
- 41% of accountants said they had difficulty navigating the detail of auto enrolment
- 32% said they had concerns about finding the right advice for clients
- 56% of accountants said they are telling all SMEs to choose the government’s NEST scheme, without apparently researching whether this would be the best option for them
Administrative burden & complexity
Helm Godfrey believes the administrative burden and complexity of auto enrolment pose the greatest challenges to small businesses, meaning it is essential that they receive good advice. There are some 30 separate administrative tasks that employers need to complete before they reach their ‘staging date’, from when employees must be auto-enrolled into a pension scheme. These tasks have been estimated to represent 103 extra work days for SMEs’ finance and HR staff.
Steve Wood says: “The complexity and scale of the task means that many small employers are simply going - or being pushed - to NEST or one of the other ‘Master Trust’ pension schemes that have been set up to meet the demand for auto-enrolment schemes; often without any consideration for their (or their employees’) particular needs. One size does not fit all and offering advice on selection of the most appropriate scheme can be an invaluable benefit that accountants can offer to their clients.
“Accountants may think supposedly ‘low cost’ pension schemes will always be best for their clients, but this is not true. Some low-cost schemes can be time-consuming and/or costly to administer and may not be best value for the employees, depending on the nature and make-up of the work force.”
It is not only the selection of a suitable pension scheme where clients need help – there are many other areas where choices can or need to be made by employers but advice and guidance on the legislation and options open to them may be in short supply.
Fortunately, 42% of accountants who took part in the research said they do recommend that clients speak to a specialist adviser about auto enrolment. However, the remaining 58% do not.
Says Steve Wood: “If an accountant doesn’t have the auto enrolment expertise itself, it makes sense to link up with a company that does, because otherwise their clients may go to someone else. By partnering with a specialist, accountants can remain part of the process, and generate additional income for themselves too. And it’s worth remembering that, with 85% of accountants we spoke to saying they provide payroll services for their clients, they are already – or will be in future - involved in auto enrolment anyway, so they should embrace it and help their clients at the same time.”
Helm Godfrey’s report, ‘Plugging the Advice Gap: how can accountants help SMEs auto-enrol?’ is available to download free from Helm Godfrey’s website. It contains information about auto enrolment and advice and guidance about navigating the process.
*Research by the National Employment Savings Trust (NEST) found almost three quarters (74%) of small businesses will turn to an adviser for help with auto enrolment, of which 59% would choose their accountant, rising to 70% for employers with four or fewer staff.