The auto enrolment ride so far has been a relatively smooth one. Massive, large and medium sized employers have taken a lot of the obligations in their stride.

However the benefit these employers have had are large teams, relatively deep pockets which allow for them to pay for proper professional auto enrolment consultancy and, whilst some left it a little late, a decent amount of time.

However 2015 is the year the auto enrolment game changes.

2015 is when we see the first small and micro businesses comply with auto enrolment.

2015 is when we see the first large batch of employers have to comply with this new regulation.

2015 is when SME and Micro employers truly start to need help.

I had a chat with someone recently who felt that SME and Micro employers would need less help (or none at all) than larger employers to comply with the new regulation due to the simplicity of their arrangements.

I couldn’t disagree with this sentiment more.

Whilst SME and Micro employers will probably have less complex arrangements they also have smaller teams, understandably shallower pockets and less time.

Also every piece of research I look at seems to indicate that the majority of SME and Micro employers will be looking for help.

The research we conducted (which was published as part of our White Paper) told us that 92% of employers would need some external support, although the level of support required varied.

A large number of firms are suggesting a underestimated demand for help in the SME and market based on their own studies.

and

The recent publication from NEST indicates a similar message…

The recent report from NEST – “small and perfectly informed?” suggests that 73% of small and micro employers will be looking for help.

The study also states that most employers will approach their accountant (the NEST survey states that 59% will do this). This is validated by our experience and we’ve noticed that initially employers see this is a business issue.

However we’ve also seen many of the accountants look to the IFA and financial planning community for support and therefore this will generate a demand.

In addition an extra 14% have suggested they will approach their IFA or financial planner directly. as well

So, every survey, commentator and article seems to indicate a demand for auto enrolment help in the SME and micro community. This raises an additional question which is as important?

The demand is there. How about “auto enrolment help” supply?

So the lions share of surveys (including NEST’s and ours) conclude that SME employers will desire assistance….but will they get it?

Whilst much has been lauded on the ‘pension capacity crunch’ the true issue as we move forward into the SME and Micro space is the ‘support crunch’.

What is the ‘support crunch’?

The support crunch is a mixture of four seperate issues. Desire to help. Pricing. Capacity and Support.

The first two (Desire to help and pricing) are having a massive impact to the number of professionals who are actively involved in the auto enrolment compliance game and the second two (capacity and support) are issues the shrinking number of professionals who remain in the AE arena suffer from.

Desire to help & Pricing – Who’s still ‘in’?

The general consensus from many IFA’s and Accountants is that auto enrolment is a pain.

However whilst taking employer ‘pains’ away are the bread and butter of many professionals there seems to be a general perception is that Auto Enrolment is a problem many don’t want to be responsible fixing!

This could be due to the fact that solving auto enrolment involves payroll, pensions, regulation and the rest (including elements of employment law and project management).

This could be that auto enrolment isn’t their core business.

or

It could be that professionals don’t see how they can price auto enrolment support in order to make a decent profit for the work involved.

This is indeed an issue.

Pricing in the auto enrolment market for large and medium sized is comparatively easy. Large and most medium employers are happy to pay for decent high quality consultancy.

However in the SME and Micro employer space budgets are far tighter than previously before. An accountant connection of mine managed to put it most articulately…

“Most of my employers want the auto enrolment problem taken away….and they want it done for nothing!”

This means that many of the professionals who may have had a desire to help SME and micro employers comply with auto enrolment have decided not to due to the fact that they cannot see a commercially viable model to service at a low cost.

However this creates another issue:-

Capacity and Support

So, many accountants, financial planners and financial advisers are in a position where they don’t want to be actively involved in helping SME and Micro clients comply with auto enrolment.

This leaves a number of professionals who see some value in helping but for these professionals this raises an issue.

A demand for help but a lack of supply due to professionals not being able to afford to deliver the service.

So, how do employers get the support they need if there is a lack of professionals who, for completely valid and commercial reasons, are prepared to deliver it?

There are actually a variety of ways…

Firstly employers could take a DIY approach.

There’s plenty of great information out there and the pensions regulators website is a particular good place to go to get decent information.

With this approach there’s good news and bad news.

The good news is the the DIY approach is the cheapest option when considered solely in cash terms.

The bad news is that whilst it might cost you a small amount of money it means that a member of an employers team needs to learn all of the intricacies of auto enrolment, put in place project plans and become not only an auto enrolment specialist but also understand enough about pensions and payroll to comply!

Therefore the cost of the DIY approach for most employers are in their employees time in order to comply with auto enrolment. When comparing both time and money this can be just as expensive as hiring someone to do the job!

The second option is to contract a professional to help.

The professional should build a project plan, provide advice and support on an appropriate pension and help put together the component parts of an employers auto enrolment solution.

For many employers this is the approach they should take. However for many SME and micro employers there may be an issue with cost.

So this raises a question…

What can employers do if they want help but feel that contracting a professional is prohibitively expensive?

What the auto enrolment compliance market is seeing growth in is ‘the third way’…

Tools to help employers comply with auto enrolment by breaking their tasks down step by step.

Interestingly the market for these sort of tools is still relatively small but I wouldn’t be surprised if we see more players in this market over the course of the next year…

You’ve got AEWizard (a really useful auto enrolment project management tool), you’ve got AEReady from Law Firm Eversheds (which although isn’t interactive produces a report designed to help firms Do it themselves)

and

then you’ve got AE in a Box (the business I’m massively proud to be a part of) which is explained here…

and here’s a video explaining how AE in a Box actually helps employers here

At the end of the day a decision needs to be made by the SME employers on how to comply with auto enrolment successfully.

With most SME employers saying they need help and many consultantcy services being out of the reach of many employers I firmly believe that the popularity of the ‘third way’ of auto enrolment compliance will grow and grow.

What do you think?

For more information on AE in a Box please click here.