The Hidden Value of Pension Management for Accountants

A significant number of accountants offer workplace pension management as part of their services without any additional charge. This is often seen as a bonus service that adds value to the broader services provided, ensuring a consistent flow of income from their clients.

However, as we will illustrate, the task of managing pensions is of immense worth and could serve as a potential revenue stream for accountants. If you haven’t started yet, here are three compelling reasons to consider it.

1. Pension management: A crucial yet intricate task

Many businesses struggle with handling their own workplace pension duties unless they possess the necessary expertise. This is a process they are mandated to carry out since auto-enrolment became law in 2012, but its complexity is a challenge.

Calculations for tax relief and National Insurance implications, especially within the context of salary sacrifice schemes, further complicate the matter.

Additional tasks like determining pensionable earnings, tracking staff changes and opt-outs, and managing statutory communications all contribute to a complex administrative burden. It’s understandable why payroll managers prefer to delegate pension management to accountants.

A proficient accountant who can accurately handle all these tasks is a valuable asset, saving businesses from the daunting task of understanding and complying with complex rules and regulations.

Simplified payment processing

Many accountants may consider the task of processing pension payments as daunting, but with the right tools and assistance, it needn’t be. Consider, for instance, the Penfold platform which allows for straightforward bulk file processing through a drag-and-drop interface.

This functionality enables you to simultaneously process files for all your clients without needing to tailor client files to accommodate diverse systems. A batch upload tool allows for rapid processing of multiple client files.

Any recognizable file can be handled, with data transformed and displayed in a clear, easy-to-understand manner. Tracking contributions, opt-outs, and payments becomes a breeze.

Moreover, the platform ensures data accuracy, reviews files in real-time, and presents a summary for verification.

UK based account managers stand ready to assist with any potential issues. This can result in a better, more efficient service for your clients that requires less time on your part.

Workplace pensions: A high-value proposition for businesses

An effective pension plan can be a powerful tool for businesses in attracting and retaining talent. By managing these pensions on your clients’ behalf, you’re adding value to their operations.

However, pension plans need to be high quality to attract skilled professionals. Despite being a significant expense, with businesses now required to contribute a minimum of 3% of an employee’s salary into an auto-enrolment workplace pension, they can provide significant savings.

If a robust workplace pension plan can aid in employee retention, it becomes a cost-saving tool rather than just an expense. Our research from last year shows that 90% of employees would remain in their current position due to pension benefits, while 16% would switch jobs for better benefits.

According to Oxford Economics and Unum, the average cost of losing an employee amounts to £30,000, accounting for the lost productivity, hiring costs, and the time required to train the new hire. A quality pension could save a company nearly £70,000 annually. Calculate the potential savings for businesses of different sizes here.

Moreover, every three years at the time of re-enrolment, your clients are likely to value your advice on alternative options. If you provide them with a beneficial plan that their employees appreciate and remain with the company for, you could save them substantial sums, making your fee for pension processing fair and justifiable.

Conclusion

It should be clear by now: pension payroll management is an incredibly valuable service. If you haven’t considered charging for this service, it may be time to rethink.

Handling these payments not only eases the burden on others, but could also be a stepping stone to your other services.

Modern software solutions, like the Penfold platform, simplify the process of handling pension contributions. If you’re interested in seeing this in action book a demo now.

Penfold will be exhibiting at Accountex Summit Manchester on the 19th September 2023 on stand C12.

You can register for a free ticket here.

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