ae: the payroll perspective (summarised)

AE: THE PAYROLL PERSPECTIVE

Will Lovegrove CEO pensionsync

Summarised from “AE: The payroll perspective” published in September 2015

At the beginning of Q1 2016, with the large volume of SME stagers underway, its worth revisiting some of the key findings of Dr Iain Clacher’s market research report “AE: the payroll perspective”

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https://www.pensionsync.com/survey

HEADLINE FINDINGS1. Time needed to help Stage SMEs is considerably smaller than for

larger Employers.

2. Time take to perform post-Staging AE tasks is broadly independent of Employer size

3. Data transfer to pension provider (from payroll) remains the most time-consuming and consistent of all recurring tasks

4. As a result we predict payroll costs will increase by 30%

5. The payroll industry is making automatic enrolment an efficient process (through the use of established processes and technology)



WHAT AREAS HAVE CLIENTS ASKED FOR ADVICE ON?



WHAT AREAS HAVE YOU NEEDED THIRD PARTY ADVICE/GUIDANCE/TRAINING ON

BEFORE YOU COULD ADVISE YOUR CLIENTS?



FROM YOUR EXPERIENCE, WHO ARE YOUR CLIENTS SEEKING ADVICE ON AE FROM?



THE ADVICE ‘PRICE GAP’


• On average, auto enrolment advice is costing approximately £1420.

• About 1/3 of respondents, however, put the cost of advice as falling in between £1000 and £5000.

• In looking at what employers are willing to pay, however, it is almost the reverse, with the average client being willing to pay £520,

• but 1/3 of respondents saying employers were willing to pay less than £100,

• and another 1/3 stating employers would pay between £251 and £500.

• There is, therefore, a significant difference between the price of advice and the price that employers are willing to pay.


WHERE HAS THE INCREASE IN PAYROLL COSTS OCCURRED?

8 = HIGHEST BURDEN, 1 = LOWEST BURDEN

TASK BURDENManage provider data uploads 6

Scheme set-up 6Client comms 4.5

Employee comms 4Opt-outs/ins 4

Enrolments & re-enrolments 4Provider selection 4Processing refunds 3



FOR CLIENTS YOU HAVE STAGED PLEASE ESTIMATE THE TIME TAKEN TO COMPLETE

THE FOLLOWING ON-GOING AE-PROCEDURES


TASK TIME (<50 employees)Processing new employers 0.69 days

Manage provider data uploads 0.58 daysRefunds 0.38 days

Processing opt-outs 0.34 daysProcessing opt-ins 0.32 daysProcessing leavers 0.34 days

Processing Zero-contributions 0.34 daysTOTAL 2.98 days


RANK EACH OF THE FACTORS BELOW WITH RESPECT TO THE RISK THEY POSE TO THE SUCCESS OF AUTOMATIC ENROLMENT (1=LOW AND 5=HIGH)


RISK MEAN RANKManual data entry 4.4

No-standard data entry 4.1Ongoing administration 3.5

Multiple enrolments 3.5Opt-ins & Opt-outs 3.3

File transfer 3.2Increasing thresholds 3.1

Increasing contributions 3


“One consequence of factors such as having to undertake manual data transfer is that payroll costs have, on average, increased by 30%. There is, however, a demand for greater automation, as the move back to manual has not only increased costs, but it has also increased risks, as manual data entry across a large volume of firms with different pension provider data specifications is likely to lead to error and hamper the success of automatic enrolment.”

Dr Iain Clacher, University of Leeds, September 2015


SUMMARY


ae: the payroll perspective (summarised)

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