Two thirds of SMEs are pension virgins.

what to do

New research is out on the purchasing intentions of the remaining 1.2m employers who aren’t “in” to auto-enrolment.

Of the  SMEs surveyed who are yet to stage, two thirds (66%) don’t have any existing pension arrangements for their staff while 8% have a stakeholder pension scheme set up but don’t have any members of staff in it. A quarter already offer a scheme to a proportion of their workforce.

When it comes to selecting a pension provider for auto enrolment, over a quarter (27%) of those who are yet to stage still say they haven’t given any thought to how they’ll go about finding a pension provider, down from 44% in 2014**. One in ten (12%) are going to search the market and do the research themselves, up from just 4% of those firms surveyed in 2014.

When it comes to seeking external advice, over a quarter (26%) intend to get help from their accountant up from 14% in 2014. One in six (16%) intend to rely on their existing provider, down from 22% in 2014. Just 6% plan to speak to a financial adviser up from 5% in 2014.

We are beginning to get a picture of what next year will be like and as this research included employers with up to 250 staff, expect to see the percentage of pension virgins increase still further.

There are some worrying trends here, not least the increased reliance on accountants for pension advice. A year blogging on has convinced me that accountants do not want to be accountable for the pension decisions taken by their clients. Any “advice” from an accountant is likely to be generic and not directive.

Where NOW are worried, and are right to be worried is that the only provider mentioned on the Pension Regulator’s website and in the Pension Regulator’s letters to employers is NEST. NEST is a good pension scheme but it is not the only scheme and is unlikely to be the best for all employers.

The Regulator is making it plain to employers and accountants and those who run their payroll bureaux that while other choices can be simplified, the choice of provider has to be taken by the employer.

NOW properly argue that without any proper means to make an informed choice, most of the pension virgins will be spoilt for choice but denied an informed choice.

The idea of a simple list of providers may seem attractive at first but does it do anything to make an informed choice? Unlikely!

What is needed- and available through – is a means of properly comparing pension providers with due regard to the employer’s workers , payroll and internal resources.

We are fascinating by getting the right employers with the right schemes. There is diversity in providers and providers are increasingly promoting themselves as niche players. If your firm wishes to operate within Sharia principles then the Islamic Pension Trust should be on your shortlist; if you are a member of the Federation of Small Businesses , you should be aware of the deal they offer with Scottish Widows and if you are a charity of social housing organisation, you should be considering Smarter Pensions (by Pensions Trust).

That Pension Virgins will chose their first (and hopefully lasting) partner on the back of a letter from the Pension Regulator or a deal done by an accountant on a golf-course is unspeakably lousy governance. Yet it seems to be the order of the day for a substantial number of employers staging next year.

It is not too late to turn this matter round, but it will need a remarkable surge in interest among employers for that to happen. There is a long and unhappy history of financial decisions being taken without proper information and without due care and attention.

As we stagger from one mis-selling crisis to another, it is time for the Pension Regulator to intervene on a pro not a re-active basis and start pointing employers who don’t know where to go, to services like who do!

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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