Bluefin: the countdown begins – Robin Hames

When pensions automatic enrolment is launched in October 2012, workers who hitherto have missed out on taking up benefits, usually through a lack of awareness, will be automatically signed up to their employer's pension scheme without needing to make any direct decision on their part. This will allow them to log their scheme membership decisions online, while benefit-modelling functionalities will be made available to provide additional assistance.

With businesses required to register with The Pensions Regulator, as well as educating personnel about policies tethered to automatic enrolment, the scheme certainly seems set to change the way both employers and employees consider their pensions. Consequently, there has been a drive of late to ramp up existing staff benefits administrative systems through enhanced technological solutions.

With a number of criteria to satisfy - such as the ability to identify eligible staff, calculate contributions and handle legislative changes - benefits system experts are in demand. According to Robin Hames, head of technical, marketing and research at Bluefin, there is a general acceptance among organisations that deploying technology can slash costs.

"Initially, some companies can be reticent as there is always that worry of piling layer upon layer of IT, which can make it difficult for communications," he says. "However, there is a fundamental understanding that this technology reduces costs. While HR and finance departments look to make savings within the benefits proposition, CEOs need to be involved in the administrative side of things, which, if done poorly, can lead to reputational damage."

Bluefin offers a mix of technical expertise and consultancy to organisations seeking to enhance their employee benefits systems. To do this successfully, it observes the genetic make-up of a firm before implementing the right system, something that, at the behest of the UK Department for Work and Pensions, has taken on a greater significance over the past year.

"We try to understand the whole company," says Hames. "This includes the interaction between HR and the payroll systems in place. This is done by establishing employee behaviour patterns and then building within the system a high degree of self service reflecting the employer's own brand. This incorporates the look and feel of the language and management information. There is no point having the best system if employees don't engage and interact with it. The challenge with automatic enrolment is that these systems have traditionally been post-payroll, while what actually needs to be delivered is a pre-payroll conversation. This will then allow employers to understand exactly what someone is eligible for and automatically trigger all of the legislative requirements."

While the response to automatic enrolment has been largely positive among companies, the road ahead will include a long list of questions concerning issues such as minimum age eligibility for employees - currently 22 - and the recommended benchmark for compulsory contribution rates. Another hurdle could be posed by employers struggling to determine who is eligible for a pensions scheme, given the high number of workers in temporary positions.

"There is always the danger of too much legislation," says Hames. "Because it is so complicated, employee categories such as agency workers remain a grey area for some companies. The first stage in tackling this will be in working out who exactly constitutes your workforce. It will be up to employers to effectively run and administer this, which could signal extra costs."

Another challenge will come in the form of integrating new pension systems with pre-existing HR and payroll applications, effectively bringing the three onto a single system. According to Hames, this is imperative if employers are to avoid unwelcome glitches such as taking an employee's pension twice.

"This is a slightly different ball game," he says. "It needs a longer lead-in game to really understand. We are creating the software to deliver from the firm's existing IT into the provider's IT to make sure the timescales and demands of the legislation are met. This really demands more parties get involved, sooner rather than later, in coming up with a proper, holistic solution that understands the strengths and weaknesses of each system.

"There are some systems that can do this. A few online benefits systems are designed to interact with HR and payroll systems and support pensions records. With a little tweaking to meet legislative demands, they will be able to function in the automatic enrolment environment."

The largest employers are under a year away from the first phase of auto-enrolment (most mid-size firms will have to act in 2013, while the smallest and new firms have until late 2016). While time is of the essence for employers, benefits providers are presented with new market opportunities, which will see companies such as Bluefin continue to place more of an onus on harnessing their technological know-how.

"Although we offer consultancy and develop technology, the nature of the relationship is more that we are a technology company supported by consultancy," he says.