What would you pay to get your firm a proper pension?

what would you pay

£500?

That’s what I think should be the procurement cost to get a firm through auto-enrolment staging.

Which is not going to please a lot of people who still consider this pension revolution “Business as Usual” and anticipate multiples of current turnover at current margins as customers pass through like cows through the abattoir.

Why £500? Because give or take a few quid, that’s the amount I need to make an acceptable margin based on business projections for an procurement service that gives a company

  • The critical path to follow to get AE ready
  • A market search based on the company’s needs , demographics and contributions
  • An options report with the information on which they can do due diligence
  • The capacity to instruct the chosen provider so that staging is implemented
  • Certification of the decision by a regulated adviser plus a full audit report

I see no reason why most companies should have to pay more. Many companies may wish to offer more than this basic service, procuring investment expertise, ongoing governance and specialist communicators to help staff better understand what they have got.

But companies planning for the future should not be cowered into believing that they will be hit with a massive fee for establishing or re-establishing their pension affairs.

Many reading this will be doing so with no pleasure at all. It is extremely hard based on current practice, for advisers/consultants to take companies through staging for much less the £3,000. The costs of prospecting for business, false starts and bad debts and the logistics of meetings, manual report writing and data gathering, make bespoke and face to face reporting an extremely expensive business.

Many firms will be prepared to meet such expenses.

But the capacity to deliver bespoke solutions in a traditional way is limited. There is insufficient capacity among properly trained advisers to reach a fraction of the 30-40,000 companies staging each month in the early part of next year.

For those companies starting on their AE journeys now with stagings in 2014 and beyond, there is no service that can deliver them an AE solution based on the what the market offers, for anything close to £500.

There should be and there will be.

Over the weeks and months to come , I will be blogging about the work I and my colleagues will be doing to build a proper enrolment service which will allow companies to certify themselves as AE compliant for an all-in fee of £500.

Don’t expect it to have much to do with the past. Don’t expect it to make anyone a fortune. Setting up a pension for your staff is your duty as an employer. While you are free to pay a small fortune to do so, you do not have a duty to pay through the nose for the service you use.

I am looking to speak with employers who have the duty of staging auto-enrolment in 2014 or 2015 (eg have between 250 and 50 staff on their payroll) I am also keen to speak with smaller employers with less than 50 staff.

I want to understand what would make you comfortable in making pension purchasing decisions and whether the service I have in mind would fit your bill.

I want to know whether £500 is an amount you would want to pay or whether, and this choice is available to you, you would by-pass even that charge in favour of going directly to NEST.

I’d be especially interested in speaking to employers who are , have or are going to stage directly with NEST or any other provider without using a consultant.

Any conversations will be treated in total confidence and you have my assurance you will not be added to my or anyone else’s prospect list, by helping me in this way.

If you could have three wishes

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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7 Responses to What would you pay to get your firm a proper pension?

  1. Hi Henry
    Really interested in this … my understanding is that AE is not just a one off thing … you do not do it and forget about it … the decisions for the employers will be on going with every payroll – the possibility of people joining and not joining or opting out !, eligible, entitled and not eligible employees ,…. given the criteria. I agree the actual process of setting the pension scheme up should not come at a huge cost – given the time for research and selection and the specific service that is to be provided – however, the audit trail on an on going basis needs to be robust and easy for employers and employees alike to maintain and use. I believe this will be more important to employers, as I see tPR already rubbing hands in delight with possible fines they could impose …..

  2. henry tapper says:

    Maybe a bit harsh on tPR but your point’s well made and a good one. If smaller companies have as much trouble as the large ones, there will be market failure.

    Steve Webb promised a review next year to iron out the wrinkles and we’ve certainly found a few!

    Even so, it’s no walk in the park, doing the ongoing stuff and there’s certainly a job of work for payroll , HR or the provider or flex provider with ongoing assesment and opt-out management.

    It looks that opt-out rates are stabilising at c 10% so far which is a relief. Let’s keep our fingers crossed!

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