So far – so good! Large companies that have staged auto-enrolment have thrown money at the problem (Lloyds Bank claim more than £1m). But we haven’t had a failure – yet!
The DWP thought the average enrolment costs for large employers would be £4,800 . They were probably out by a factor of 20 which suggests that the costs for the SMEs and micro employees will be £2,000 per staging (not the £100 in the DWP’s impact assessment).
Speaking with a large master trust this morning, I asked what their biggest business risk was. The answer surprised me.
They were most afraid that many companies would be so complacent about AE staging that the mastertrusts with an absolute or assumed “public service obligation” would become firefighters rather than pension operators.
The fear is that without the support of consultants (who do not have a public service obligation) NEST and NOW , both of whom claim they will take whatever comes their way, will see their reputations destroyed in the process.
One of the issues that the OFT should be considering is whether the public service obligation to provide a pension should be extended to provide support in getting “auto-enrolment ready”.
This of course begs a huge question about independence. For many NEST is a lemon and for many more it is not the only fruit. From my limited knowledge of SME procurement, I suspect that few small firms will want to throw their hand in with its pension provider to establish its pension strategy.
Decisions such as how to manage the assessment of workers and deal with opt-outs, the contribution structure , communications with staff not to mention what to do with legacy pensions require quality information and guidance from an independent source.
It looks as if the majority of the 1.3m companies staging by 2017 will have to do so with a minimum of advice so if the supertrusts are to avoid being the adviser as well as provider of last resort, new structures are going to have to emerge.
It seems more than likely that those tasked with getting the auto-enrolment monkey off the Board’s back will be turning to the web for help. A quick search on “auto-enrolment advice”does not provide much solace.
What seems clear is that while there are auto-enrolment solutions a plenty on the market- there is nowhere for these solutions to be properly evaluated and tested.
Companies have no single site to compare the market of pension providers . There is no means to assess the value of their current arrangements to assess how they stack up against the likes of NEST or NOW.
Maybe it’s time for some “out of box” thinking by those involved in pensions. There are no shortage of people exhorting us to get ready but little or nothing being done to avert the train-crash if we can’t get access to the support we need.
If there is a train crash, it will be the providers who will have to clear up the mess and their reputations that will be tarnished. Sure employers have duties and sure there are fines in wait for employers who don’t fulfil them.
But in the absence of a credible means to support the SMEs and micro-employers for whom no support mechanism exists, it is high-time those of us who call ourselves “expert” stood up to the plate.
And perhaps it’s time for the large pension providers who would benefit from such support, to think about ways to nurture its growth
- Never mind the width – feel the quality! (henrytapper.com)
- Why we don’t need to fear a pension “advice gap”. (henrytapper.com)
- “Comply or explain” – will “bottom up” regulation work for pensions? (henrytapper.com)
- A splendid race to the bottom! (henrytapper.com)
- The Regulator’s right to be cautious about mastertrusts (henrytapper.com)
- 2 cheers for the Regulator’s new clothes (henrytapper.com)
- Dear OFT…. (henrytapper.com)
- OFT rattles pension consultant’s cage -shock! (henrytapper.com)
- Auto-enrolment – an SME guide (xlntelecom.co.uk)
- Auto-enrolment – stay cool – hang loose! (henrytapper.com)