Understanding the Letter of Engagement for Auto Enrolment
Understanding the role that the letter of engagement plays with auto enrolment is a key part of an accountant's responsibilities to clients.
With an estimated 570,000 small businesses staging for automatic enrolment this financial year, understanding the various pension communications which must be delivered to employees is critical to compliance.
The same goes if you are an accountant, you will want to specify what areas of the Workplace Pension Reforms fall under your current agreement, and what doesn’t. A Client Engagement Clarification sheet (CEC), sometimes called a letter of engagement, is the simplest way of communicating auto enrolment to your clients.
The Letter of Engagement
By sending a letter of engagement, your practice is essentially clarifying with your client what work is involved to get them compliant and up-to-speed. It also clears up what your clients can expect you to do on their behalf as their accountant, and what they themselves will need to do.
Your letter of engagement should cover:
- A reminder of the introduction of automatic enrolment
- An explanation that because it is brand new legislation, that it may not be covered under your current agreement
- Clarification over what is their responsibility, and what you will cover as their accountant
- A breakdown of non-compliance penalties and charges, in the event they do not comply with the legislation
- An explanation over what you can help with if the client decides to extend your current agreement to include automatic enrolment, and what the fees for this would be
The Benefits to your Clients
A full letter of engagement can extend to five pages according to the Institute of Certified Accountants, which demonstrates the level of detail the letter should include. By breaking down clearly what your client’s responsibilities are, they have a straightforward list of tasks which need to be completed by a certain deadline, i.e. their staging date, and will understand the consequences if they choose not to act.
The IRIS Auto Enrolment Accountancy Kitbag
To help accountants manage auto enrolment and make the Workplace Pension Reforms a core part of your business strategy, we’ve created the IRIS Auto Enrolment Accountancy Kitbag. The Kitbag is a free download and contains everything you need to make auto enrolment a key part in your strategy. Content such as letter templates, pre-recorded webinars, free guides and exclusive content from The Pensions Regulator is included.
Download your free Kitbag today using the button below, and see how the pension reforms can work for your business today.