The relationship between pension scheme administration and ...

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If employers are to use their existing arrangements tocomply with the auto-enrolment requirements, there are anumber of issues to consider including enrolment and reenrolmentprovisions, eligibility rules, contribution / benefitstructures, pensionable earnings definitions and defaultfunds (see Section 4).How do you currentlysend contribution andsalary data to yourscheme administrator?5.5% 5.0%Changes to systems and procedures will also be requiredfor the vast majority of schemes but these discussionsappear to be at an early stage and, as the graph belowshows, in most cases, they have not yet even started.Our view is that that the changes to pensions and payrollarrangements will be one of the most challenging issuesand early consideration is recommended. On a positivenote, as is also shown below, 51 per cent of respondentsalready provide contribution and salary data direct to theiradministrator by direct upload.Two respondents indicated that discussions had not takenplace because the detail was still unknown. Followingpublication of the Independent Review and more recentlythe Pensions Bill, however, the final form of auto-enrolmentand NEST is almost there.On paperBy emailBy direct upload to theadministrators systemsOther (please specify)51.4%38.1%Alarmingly, only 14 per cent of respondents have quantifiedboth the direct and indirect costs of complying with thereforms and nearly two thirds have not considered either.For many organisations, contribution and administrationcosts could be significant and modelling of these, well inadvance of an employers staging date for compliance,is vital for budgeting purposes and to avoid unwelcomesurprises.Have you discussedwith your pensionscheme administratorany changes that youwill need to make tosystems and proceduresby 2012?52.8%11.8%35.4%Have you quantifiedthe additional costs ofcomplying with the autoenrolmentrequirements?Yes, both the extra employercontributions and additionaladministration expensesYes, but only the additionaladministration expensesYes, but only the extraemployer contributionsNo64.6%14.1%8.9%12.5%YesNoDon’t know10
We concluded this section and the survey by askingrespondents for their views on how auto-enrolment wouldaffect the amount of administration that is completed on lineand the costs of administration.There seems to be a consensus that, in future, more routineadministration will take place online, but predications overcosts are much more diverse. That said, comments inthe survey feedback section suggest that a number ofrespondents believe costs will come down over time aftersome initial one off disbursements.Looking to 2012 andbeyond, what proportionof routine administrationis it reasonable to expectto be done online?All of itMore than we do nowThe same as we do nowLess than we do nowDon’t know0.6%7.5%8.6%16.7%66.7%If the momentum istowards more onlineactivity and ‘selfservice’, what are yourexpectations aroundadministration costs?SignificantincreaseMarginal increaseAbout the sameMarginal reductionSignificant reductionDon’t know9.2%24.1%11.5%5.7%28.7%20.7%11
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