I’ve referred earlier this week to an excellent article by Kim North in Money Marketing in which she points to the ongoing work Scottish Widows have been doing on the participation of women in workplace pensions. In the same article she argues that there is a moral argument for insurers to continue participating in auto-enrolment.
The link is there, auto-enrolment is a national project of significance way beyond the short-term p/l of a few financial services players. The long-term advantages in terms of being associated with a real success story (including the increased participation of women in the pension system, dwarfs the short-term difficulties some insurers are having adapting to a new type of customer.
Kim North and Bridget Greenwood (who shared the post with me) have met a steady stream of negative comments – all from men – both on the MM site and on the Linked In pages where the article appears.
I don’t think it’s a coincidence that it’s two ladies against dozens of men. That’s what it’s like to be female in financial services. I don’t think that it’s strange that two women are arguing from a moral basis and that the men are arguing that they are uncommercial and sentimental. After all this is a man’s world where the inequalities between male and female participation in the workplace has long been considered a side issue.
Purely on moral grounds, insurers have a moral responsibility, if only to their brand, to continue to insure and not withdraw from a project which is clearly working, in terms of inclusion and popular support.
I post below a second argument that I have taken from a thread with a number of comments on it. You can judge for yourself whether these comments are pragmatic or patronising. The thread is here. It’s on the “auto-enrolment and workplace pensions mastermind” Linked In group which is well worth joining.
The first time I had to consider this was in 2010 when I sat in a room at the DWP with all the insurers who were then active in the workplace. It was the time of the Yeandle/Boulding/Johnson review of auto-enrolment. With one exception (L&G), the insurers said they did not intend to play in AE at the micro end.
At the time I thought this was posturing. Technology would catch up and they would find a way to deliver workplace pensions economically on an industrial scale. I have always thought that the market will require insurers to adapt to a new world and create product that can satisfy the needs of micro employers. I still think this will happen.
Since then, many insurers have come out with statements of intent, Scottish Widows say they intend to win 10,000 new customers, Standard Life’s good to go product is available to all but the smallest employers and organisations such as Royal London have revitalised their businesses to face the challenge ahead.
They recognise that the compulsory adoption of workplace pensions by all UK employers is a challenge that they need to be a part of. They are morally committed to participation.
I would consider it an act of wilful cowardice, of moral funk, if those insurers who have made commitments to the market, withdrew from those commitments. Unless that is, the assurance on which those commitments were undertaken are removed.
This is one of the reasons I want Government to be fair about NEST and about how they construct the workplace pension directory.
I am not saying that organisations such as Prudential, Zurich and RSA who were once key players in the SME space, are cowards, they made their intentions clear early on and have stuck to their guns. But organisations who have made it clear they are in it for the long haul, need to stick by their promise to the market – they know who they are!
Steve and Scott (friends and participants in the thread), the world will not be a better place for the withdrawal of current participants, the standard annuity market is an example of what can happen when diversity is lost, competition and innovation go out the window – the consumer suffers,
It is encouraging to see serious new entrants into the pension market- such as Friendly Pensions and a number of smaller master trusts making use of the low barriers to entry. They will succeed if good enough and we will promote them – if they are good enough.
We will continue to support the mainstream insurers as well as the bigger master trusts because a market without choice is a barren market for employers.
I would hope that all who care about the UK workplace pension market will join with Kim and Bridget in encouraging the on gong participation of the insurers’
It is important that the insurers who may be wavering, be encouraged to stay. If those who advise employers on auto-enrolment say that the workplace pension does not matter, then workplace pension providers will feel inclined not to bother. Actually we make too little of the ongoing participation of Friends and Aviva and Aegon and Royal London and Legal & General and Standard Life and indeed the many insurers not open to new business who have done work at the top end of the market (BlackRock, Fidelity,Zurich).
Without these organisations, the burden on employers and their payrolls would have been immeasurably heavier to the extent that the artifice of auto-enrolment might well have cracked.
I will include the Regulator in this congratulatory roll-call as Charles Counsel and his team have done magnificently well to get us to where we are.
To see the auto-enrolment implementation project through, we need all of the above but particularly we need the ongoing support of the insurers to provide diversity, ease the capacity crunch and ensure that the high-standards of governance they are displaying (through their IGCs) are adopted across the workplace pension market.