Five years ago, one of the major concerns for the Johnson Committee that Steve Webb set up to consider auto-enrolment was whether there would be choice by the next election. At the meeting, attended by all the workplace pension providers, it was only NEST who could give that assurance.
Whatever the reason for others to sit on their hands, and I suspect they were good reasons, the success of auto-enrolment so far has meant that there remains a strong market between providers for new business.
New providers have arrived (primarily as master trusts) and old hands have smartened up their act. The products that can be purchased today are less expensive, more transparent and better adapted for the needs of auto-enrolment than we could reasonably have expected following that meeting.
While the supply side has improved, access to those products has not. The numbers of advisers active in auto-enrolment is small and falling. Advice needs to be paid for and there needs to be money within the system for advisory invoices to be met.
The end of commission , the loss of consultancy charging and the banning of middleware costs being charged to the member has seen the corporate adviser having to bill employers. It has not been possible for advisers to bill the equivalent of the commission income they previously enjoyed and it has been hard to get bills paid by employers engaging with workplace pensions for the first time.
We think the fee appetite among SMEs and Micros to pay to establish a workplace pension under auto-enrolment varies between £500 and £0.
Clearly this does not cover conventional advisory costs. A manual process offering anything like a whole of market report on the employer’s options is hard to produce at less than £1000 and for many advisers, the economics of auto-enrolment advice do not stack up.
But as the advisory tide recedes, it is becoming clear that many employers are going to be left beached without advice or access to the information needed to make an informed choice on behalf of staff.
This is worrying for both employers and for the Regulator. Dame Ann Begg and the DWP Select Committee have called for a further review of the auto-enrolment project following the formation of a new Government. Whatever hue that new Government, issues surrounding the choice of workplace pensions must be high on the review list.
It’s important that http://www.pensionplaypen.com has been shortlisted for Auto-Enrolment Solution of 2015. It plays to our pride and morale sure, but it’s a recognition from the IFA market that we matter and that choosing a pension matters.
The technology solution that we have pioneered remains one of one, no other website has created a service that compares the market using the employer’s unique metrics. We hope that we will be involved in any review of auto-enrolment as experts in this matter.
I am confident that over the next few months, we will make sure that “no one gets left behind”. The accountancy and payroll profession are stepping up to the mark, bringing new products to market to help those at the coal-face adapt processes in readiness for the massive influx of small companies from the end of this year.
Now it is up to those in pensions to find a way to be a part of the process so that choosing a pension is as much a part of the employers duties as registering with the Pension Regulator and managing contributions and timely member announcements.
Workplace Pensions matter more today than any of us thought they would five years ago. They matter to the insurers who have kept to their task, they matter to employers who see auto-enrolment as something to be a part of – not avoid. Most of all, these pensions matter to individuals. It is their way to the Pension Freedoms and without a pension , people will feel and be the poorer.
Our job is to make sure that employers understand and record what they are buying , staying clear of the rubbish and buying into the excellent stock of good quality workplace pensions available through http://www.pensionplaypen.com.