The true value of pensions for accountants

Many accountants don’t charge for the administration of processing workplace pensions for  their clients. If the client is paying them a good retainer for a range of services, it’s often seen as a bit of a sweetener that’ll keep the bigger regular pay cheque in place.

But as we explain below, that work is valuable, so should very much be considered a potential additional revenue stream for accountants. If you're not already, here are three reasons to consider charging.

It’s essential, but complex work

Unless they have the skills in the team, businesses find it challenging to manage their workplace pension duties themselves. Since auto-enrolment became law in 2012 they are obligated to do it, but it's complex.

Tax Relief needs to be calculated correctly and National Insurance comes into play too, particularly if employees are using the Salary Sacrifice scheme to reduce their NI contributions.

Then there’s the various ways of working out what are deemed pensionable earnings. Staff changes, opt-outs and statutory communications also all add to a complex administration mix. So there are many reasons payroll managers like to outsource processing pensions to accountants.

Having someone to process everything accurately, meaning they don’t have to navigate confusing rules and regulations, means a trustworthy accountant is worth his or her weight in gold.

Processing payments is getting easier

If you’re an accountant already thinking that processing pension payments is a bit of a headache, rest assured it needn’t be – if you’ve got the right tools and people to help you if anything goes wrong. As an example, the Penfold platform offers easy drag-and-drop bulk file processing.

This means you can upload files from all your clients in one go and there’s no more reformatting your client files to fit different systems. You can process 100 clients' files just as quickly as they can process one for themselves with the bulk upload tool.

It will handle any recognisable file, transforming the data and presenting it in a clear and user-friendly way. Contributions, opt-outs and payments are easy to see and track.

The platform also helps to ensure 100% data accuracy, reviewing the file in real-time and summarising the data for you to cross-check.

Perhaps best of all, we back it up with UK based account managers who can help handle any errors. All of which means you could offer an improved service to your clients that takes up less of your time than it might currently.

Pensions are extremely valuable to businesses

In terms of attracting and retaining talent, the right kind of pension can be a valuable tool for a business. If you’re managing their workplace pension on their behalf, you’re contributing to that.

The type of pension businesses are offering employees needs to be a good one if they’re going to attract talented and skilled workers but it’s also a significant cost.

Since companies were obligated to contribute at least 3% of a salary into an auto-enrolment workplace pension they’ve become the most expensive workplace benefit for businesses.

But if their workplace pension serves to attract and retain talent, that most expensive benefit suddenly actually starts to offer a significant cost saving to businesses.

In research conducted last year, we found that pensions are the benefit 90% of employees will stay in their current role for. The flip side of the coin is that 16% of employees will jump ship for a job with better perks.

So what could companies save? The clever people at Oxford Economics and Unum have worked out that the average cost of losing an employee is £30,000.

That includes the lost productivity from their departure, and the cost of hiring and getting their replacement up to speed. If a better pension were in place, that company could be saving nearly £70,000 per year. You can work the figure out for different sizes of companies using our employee retention calculator.

And every three years when re-enrolment comes up, your client is likely to want some suggestions from you regarding other options. If you put a good one in front of them that their staff will love and stay with the company for, you’ll be potentially saving them the kind of sums outlined above.

All of which makes it entirely likely they won’t mind you charging them a fair fee to process the pension that you suggested.

Final thoughts

We're sure you’ve got the picture by now: if you’re handling pension payroll payments, the work you are doing is super valuable. If you’re not currently charging for it, maybe it’s time to think again.

Processing these payments is taking away the pain for someone else and if you offer pension payroll processing, it could also act as a gateway to your other services.

Lastly, with modern software, processing pension contributions doesn’t have to be difficult. If you’d like to see what we mean learn about our pension platform.

If you're interested in finding out how our tech-first pension platform can simplify the process of managing your clients' pension schemes request more information today.