The predictions are dire – mass non-compliance – auto-enrolment brought into disrepute and pensions marched out of the last chance saloon and replaced by ISAs.
It is as if some of my colleagues actually want this to happen- not that anyone has a better idea than auto-enrolment. A route march to compulsion would hardly win a referendum
But why am I optimistic?
First, this Government has turned its focus on making sure auto-enrolment II – happen. Listen to Lesley Titcombe at the Pension Regulator or speak with Ros Altmann’s press office, auto-enrolment is at the top of the immediately to-do list.
Second, we are at last tackling the big advisory issue, how to deliver advice at a sensible price to people who’ve never bought it before. There are two big constituencies, those with decent amounts in DC pots (wanting to use pension freedoms) and the 1.8m employers still to set up workplace pensions for their staff.
It has been clear for a long time that technology would have to play a part, financial decisions are about the only decisions we don’t take with a smart phone and this is largely due to the innate conservatism of advisers, providers and the various regulators involved in delivery.
The arrival of new Regulators and the departure of the old guard is no coincidence. Hot on the heels of the arrival of Ticombe, Cracknell, McDermott and Altmann comes the new consultation – the Financial Advice Market Review – its key theme- how to make advice more attractive to the mid- market.
The importance of this market review to the delivery of advice to those staging auto-enrolment has not been picked up on (yet).
The third reason to be cheerful is the continued enthusiasm of those providing workplace pensions, whether under master trust or under contract. The latest research we’ve collected for the Pension PlayPen includes 34 serious providers- (and a few who obviously aren’t that serious!).
Not all these providers will succeed (and we need to be aware that picking a loser could be an expensive bet). But the majority will. One of the reasons for this is the dramatically reducing cost of providing pensions. Costs are falling because pension providers are at last harvesting the technology dividend.
I predict that by this time in 2017, the idea of transferring data using CSV files will be as laughable as brick like mobile phones. We are moving at a remarkable pace towards a truly efficient means of data integration unthinkable when we started thinking of how auto-enrolment would work, some five years ago.
I do not see the problems with auto-enrolment as supply side. If there are problems, they are on the buy side.
The tools will be in place, we won’t have a capacity crunch. But that doesn’t mean we’ll all have good workplace pensions. To make sure we have 1.8m employers buying in a sensible way, we need a massive upturn in the engagement, education and empowerment of employers to act in their and their staff’s best interest.