In the new world it is crucial to clearly articulate all the work that an adviser and pension provider will be carrying out on behalf of the employer.
One organisation that has been making great leaps forward in this area in recent months is Aegon. In designing its auto enrolment proposition the company adopted a strategy of using e-commerce at every possible opportunity in order to remove paper and the associated time delays it inevitably brings. The result is a process that is virtually paperless from end to end.
For each area of an employer’s obligations there is a clear automated process designed to facilitate streamlined execution. Starting from helping the employer understand their auto enrolment timescale, by giving a countdown clock to their staging date, the system then takes payroll information, analyses the workforce and determines the categories of each employee relieving the employer of the burden of such assessment. The service can be used for both existing Aegon schemes and new arrangements.
Reporting requirements for the Pensions Regulator are addressed through the generation of management information and in addition the system provides all the communications that employers are legally obliged to give their staff. This delivers targeted information to employees at the right time. It is achieved through the use of a seven-stage communication plan that introduces employees to the principles of pension savings and auto enrolment. This explains to them stage by stage what will happen in the process as well as producing frequently asked questions and specific communications for existing scheme members. Via the assessment process it identifies the eligible job holders who need to be also enrolled and facilitates all the necessary actions for each category of employees.
It is important to recognise the considerable economies that are achieved both in processing time as well as the reduction in delays by using electronic communications as opposed to postal ones.
This is going to be particularly important during the peak auto enrolment periods where paper-based solutions might generate an overwhelming volume of documents, complicating matters when such delays can least be afforded.
From an employer perspective simply by providing Aegon with the necessary HR/payroll file and any scheme rules, the Aegon onboarding team will then set up the scheme within the Aegon auto enrolment hub, map the payroll data to the necessary formats within the company’s long-established Smart Enrol system and create the necessary user ID and password for Smart Enrol. As part of this process the team will provide WebEx or face-to-face demonstrations to the necessary staff within the employer firm on how to use Smart Enrol. At this point the employer will also be given a reminder that they need to register with tPR.
The Smart Enrol system validates all data to ensure that it is in the correct format, assesses the workforce and categorises each employee, in accordance with legislative requirements according to their salary and age. Where Nest is being used alongside an Aegon scheme it allocates employees to the appropriate scheme. Assessment communications are issued to all workers dependent on their category to the e-mail address that has been verified for each. The system also offers data in a CSV file for the employers to extract, for example to support a Nest arrangement.
The employer’s tasks end when they have completed the assessment and contribution processing. Going forward Smart Enrol holds all the information required to create a pension plan for new joiners and links directly to Aegon’s back office system.
Throughout the process the employer has access to a Smart Enrol dashboard which provides them with full details of all the events that need to take place and an audit trail.
The above activities are areas where it can be clearly shown that Aegon is removing a significant burden from employers. In so doing they are creating real value and services that employers should be prepared to pay for.
The above is a great example of a pension provider implementing technology and automation to achieve efficiencies that are crucial to achieve low-cost auto enrolment. Without such streamlining the process would become far more expensive for the employer, adviser and provider.
It is really important that the whole auto enrolment community does not congratulate itself too soon on apparent early success. In practice we have only seen large employers with considerable resources staging. For auto enrolment to be a real success the small and medium-size companies who begin staging next year need to be able to do so with the minimum of pain and interruption. Services such as those described above from Aegon are an excellent example of how this might best be achieved.