Technology – not short-cuts – points the way to good pensions.


Pension Providers are challenged by later-stage auto-enrolment

Let’s be under no illusions. The scale of the challenge facing workplace pension providers from auto-enrolment in 2016 is every bit as daunting for them as the challenge to payroll , advisers and employers.

The challenge is not about product. The products available from the leading pension providers are vastly improved from the options we considered back in 2010 at the time of the Johnson/Boulding/Yeandle review.

  1. Competition has improved, NEST, NOW and People’s Pension and a host of smaller master trusts have changed the game.
  2. Pricing has improved. The cost of ownership for members has fallen dramatically.
  3. Fairness has improved. The abolition of AMDs and restrictions on member borne charges to pay for non-investment matters has made pensions fairer.

But problems remain with Distribution and Implementation – Sales and Sign-up.



The problem with distribution is about provider visibility.  Take this week’s headline from NOW


Well that’s another 16,000 of the 1.2m employers taken care of then…

I’m not so sure. The press release has the NFRN’s Paul Baxter stating

All we ask is that retailers find out their staging date by visiting The Pension Regulator’s website and inputting their PAYE reference number. They can then sign up with NOW: Pensions in a matter of minutes via its website.” 

On the face of it, this is a win-win. The NFRN promote awareness and the issues for employers involve a few clicks with a mouse – that’s “ALL WE ASK”.

The problems with short-cuts

There are a number of problems with this;

  1. The newsagents of Great Britain are not a homogenous group and their requirements for a workplace pension will be diverse. A one size fits all approach assumes the opposite.
  2. The employees of these newsagents, soon to glory in being entitled, eligible and non-eligible workers are not a homogenous group and may wonder who Paul Baxter is to have made decided upon the pension on which his or her later life finances depend.
  3. By simplifying choice to a default of one – NOW pensions- NOW and the NFRN are cutting off the air supply at birth to this new baby.

This third point suggests that there is something at best unethical and at worst uncompliant with the NOW/NFRN approach.

This is what the Regulator has to say to employers choosing a workplace pension

It is important that the scheme you choose is well run, offers good value for money for you and your staff and that it will work with the payroll process or software you’re using, so allow plenty of time to make sure you make the right choice.

Let’s remind ourselves of the advice of NFRN to its 16,000 small businesses.

All we ask is that retailers find out their staging date by visiting The Pension Regulator’s website and inputting their PAYE reference number. They can then sign up with NOW: Pensions in a matter of minutes via its website.” 

One of Steve Webb’s favourite phrases is that “we should allow in our garden a thousand flowers to bloom”. The Distribution of workplace pensions will not be sorted by premature defaults. We need to find a way to allow employers to choose on the basis laid out by the Pension Regulator.

Sign- up

The Press Release touches on the second major problem for providers, namely the transfer of data from a company into the Provider at “sign up”.

Providers call this the problem of implementation, installation or simply “scheme set up”.

This is no easy process, the data is not in one place, Provider’s need information from a number of sources including payroll, HR and the static data about the employer (address, registration no etc).

Where the numbers of employers making applications can be numbered in tens or even low hundreds a month, this can be sorted manually, but as NOW rightly point out, the solution from 2016 when applications are likely to spike exponentially requires an online process.

The employer is not just being asked to “sign up”, they are being asked a number of questions about what they sign up for.

  • Are they going to contribute from staging or use postponement?
  • Which  contribution definitions do they want to choose?
  • Will they use salary sacrifice/exchange?

Are these decisions to be defaulted – and why?


Due diligence and a duty of care?

Is it too much to ask employers to conduct some due diligence into a decision they are taking, the consequences of which will last for as long as the business (and for staff as long as they live?


There is a technology solution and you can access it today

The answer to the problems that these deals create is technology. It is possible to take employers on a digital journey that allows them to;-

  1. Digitally assess their workforce using live pension information
  2. Model contribution structures (including postponement, phasing and salary sacrifice)
  3. Collect the data needed to make an application and digitally apply to all workplace pension providers in the market
  4. Compare the offers made by those providers as the Pension Regulator asks them to
  5. Document the decision taken with the assistance of ratings on the key metrics
  6. Complete the application process digitally using the data already collected.

All this need not take days, it can be done in hours, most of it can be done in minutes.

It can be done using which of course provides a deep analysis of NOW Pensions as it does the other mastertrusts as it does the insurance companies and even the more obscure SIPP providers who may offer a non-insured workplace pension that qualifies for auto-enrolment.

Most employers will not explore SIPPs or Corporate wraps or be interested in whether a provider will allow adviser charging. Nor will they be interested in scheme aggregation or pot follows member. These are advanced features of a pension advisory service that suit the needs of the few.

But all employers should be interested in the fit of their workplace pension with their payroll system, the rating of the investments, the way the provider looks after older workers and the costs borne by both the employers and staff. They should be interested in the support given to staff both initially and going forward. They should be interested in whether the provider is likely to be around for the long-term.


Bulk deals are bad news – we do not need to default.

Since there is capacity to do all this and to do this at a minimal price, I see no reason for bulk deals.

Indeed I see the kind of defaulting going on as standing in the way of proper engagement by employer and member in what they are purchasing.

I am not accusing NOW pensions or the NFRN of any illegality. I am sure that this deal is being done with the best of intentions. But it is the wrong deal. The deal should be to promote choice in the market and the Pension Regulator, the pension providers and all intermediaries should be looking to technology to provide proper answers and not short-cuts.


Use to choose the workplace pension

We at will continue to campaign for proper choice in the market.

We are spending the revenues we are receiving from larger employers to improve the service so that the cost to small employers trend to zero.

If you are an intermediary, whether a payroll agent , financial adviser or accountant and would like to offer your clients choice, please go here


If you are an employer and you want to choose a pension properly , please go here


Playpen home


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to Technology – not short-cuts – points the way to good pensions.

  1. I constantly spent my half an hour to read this blog’s articles everyday along with a cup of coffee.

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