Nest and Webb clash over IFAs’ role in auto-enrolment

Pensions minister Steve Webb may have provoked the ire of advisers in claiming small business will not need to seek auto-enrolment advice, but the National Employment Savings Trust (Nest) is putting IFAs back in the picture.

Webb (pictured) last month claimed small businesses should not spend money ‘unnecessarily’ on advice because the majority of qualifying auto-enrolment schemes will be very similar.

If the value of advice stopped at the point of purchase, he would be right. However, Nest believes there is an ongoing reason to pay the fee. It has painted a different picture of advisers’ role under auto-enrolment, arguing small businesses will begin to regard IFAs as one-stop tax and pensions shops, dealing with everything auto-enrolment throws at them.

Employers are making preparations

Helen Dean, managing director of scheme development at Nest, says that, following the government’s recent confirmation of the staging timetable, auto-enrolment will start to move up the to-do list for all employers, even the smallest.

‘We are currently working with over 130 employers,’ she says. ‘They all certainly rate ease of use as their top priority right now and they want to be sure they understand all the features of the schemes they may use for automatic enrolment, as well as be sure they comply with the law. That’s where advisers might come in.’

Even with easy-to-use schemes such as Nest and its low-cost competitors, such as NOW Pensions or the construction industry scheme from B&CE, there will be scope for advisers to take on the role of the administrator on behalf of the employer.

‘Businesses of all shapes and sizes often ask for help in filing their tax returns and accounts,’ says Dean. ‘Dealing with the pension scheme under automatic enrolment may be one of those areas where some of these employers will appoint a professional to administer on their behalf.’

Jason McGuigan, financial planning director at Oxford-based IFA and accountancy firm Critchleys Chartered Accountants and Business Advisers, says a number of employer clients have started flagging up their need for help with auto-enrolment. ‘We have more small employers looking at whether they should set up something now, in advance of their auto-enrolment deadline,’ he says. 

However, he warns that IFAs will need to be careful how they price auto-enrolment advice if it is to be profitable, arguing it could be ‘high volume, low profit’ work. Nest reckons small businesses are willing to pay to have pensions taken off their hands. The smaller they are, the more valuable that service will be; but if it is too expensive they are likely to take Webb’s advice instead.