Experience is the best form of education, that’s why fees are so high.
In the case of NOW: Pensions, this fee translates into £70,000; comprised of a £50,000 fine for failing to collect and invest core financial contributions accurately and promptly plus £20,000 for failing to keep some members properly informed.
So what can we learn from these latest developments?
What we certainly know is that, due to the rapidly changing regulations over the last few years, the importance of a pensions provider has become imperative. Pensions depend more and more on the provider and the scheme you choose to invest in. The procedure is like selling yourself an insurance policy. So, without savings, the hope of retiring diminishes.
Pensions perform better because your provider invests your contributions wisely. When a pension strategy is well planned and efficiently executed, it offers a return on investment that is far better than anything a simple savings account could provide.
The fine that The Pensions Regulator imposed on NOW: Pensions shook our industry but shouldn’t come as a surprise.
Keeping track of changes in pension legislation requires a high level of dedication, attention to detail and experience. An integrated system that links payroll to pensions is vital to ensure that all actions are done properly, impeccably and on time.
TPR has set a deadline for NOW: Pensions to regulate the flaws that were detected in their transactions and to arrange a compensation plan for its affected clients. NOW: Pensions has 1.5 million members and the company stated that delays were due to inaccurate, incomplete or missing payroll data from employers.
That being said, the parties involved in the process are: the employer, the pension provider and the payroll provider – if there is one involved.
Therefore, it is evident that if one single company handled the payroll and the auto enrolment processes, these kinds of blunders would have been avoided.
When the functions of payroll and pensions are carried out by the same organisation, chances are that things can rarely go wrong. Moreover, by integrating the two functions with the appropriate cutting-edge technology, all key data is linked, verified and processed flawlessly.
With a solid structural design, payroll and pension information is combined and all procedures are accurate, guaranteeing tight monitoring and reliable transactions. Automation and integration does not only mean lower costs, but also a single record for the entire journey of every member, from enrolment to retirement.
Operational risks inevitably loom when systems are not integrated. A single source and a unique format reduce the chances of human error, which usually happens when data is handled manually, especially between separate organisations.
Last but not least, a well-run payroll and pension system improves the user experience through ongoing support from a dedicated expert and by offering members the opportunity to monitor their data in real time. When members can access their assets anytime online to check their funds and investments, the feeling of security becomes quite strong.
Experience proves that the devil is in the details, when it comes to the maze of regulations and the technological demands that tackle them. More attention to detail, highly integrated systems, and experience combined with effective implementation are the elements to overcome the challenging nature of pensions.