Today is the day of the Friends of Auto-Enrolment Capacity Crunch Conference which takes place in PWC’s offices at Charing Cross.
The big debates of the day will be about
- Whether there will be a capacity crunch either in provision of pensions or advice in the next three years
- Where the demand from the 1.8m employers still to stage will be met.
I have always been an optimist, believing that if people adopt a positive mental attitude to a problem, whether individually or collectively, they can make a difference and solve the problem.
I share this conviction with Andy Agethangelou, which is why I have always supported his work with Friends of Auto-Enrolment and urge everyone I come in contact with to do the same.
It is very easy to hear the Friends of Auto-Enrolment being dismissed as a collection of suppliers looking for a market. This is precisely the characterisation it received from one senior policy wonk at a meeting I attended with the Pension Minister,
But that is entirely to miss the point. There are indeed few on the buy side attending these meetings and those that are are mobbed like females in a sex-club. It is inevitable that suppliers (I am one of them) will drive things forward – they are motivated to do so.
But the momentum created by suppliers motivated by a common purpose (to keep the auto-enrolment show on the road), has proved sufficient to bring to the party the Pensions Regulator, Steve Webb and representatives of the DWP. We haven’t seen much of the current Pensions Minister yet, but I hope (and suspect) that that will change.
For my optimism to be justified we need three things to happen
- We need to maintain the political imperative ;- auto-enrolment is both too big and good to fail
- We need to continue to attract innovation to the provision of auto-enrolment services and the workplace pensions schemes they supply.
- We need to change the perception of auto-enrolment among small employers from being a duty to a blessing.
Auto-enrolment – too big and good to fail?
The political imperative to ensure that auto-enrolment works is impressive. Both at home and overseas, the success of the project so far is unquestioned. Steve Webb’s’ line “we have that political rarity, a policy success story” was reserved for auto-enrolment (and auto-enrolment alone).
The market forces needed to fulfil on the promise of the early years are various and there will need to be skill and ingenuity applied to ensure that all the moving parts work. The Government know this and HMRC is actually running a conference on Monday to make this happen.
Ironically , the people I know involved in auto-enrolment offering this technology aren’t going, they are too busy applying it!
Whether it be because of Real Time Information, Auto-enrolment or any of the smaller initiatives that Government is rolling out using payroll as its intermediary, there is a realisation that Government cannot light the blue touch paper and stand back.
I am confident that the support from Government for auto-enrolment (based on pride in success and fear of failure) will be the first ingredient in the cocktail of success that I predict for the next three years.
Auto-enrolment; a challenge to the innovators?
For some time, people like me have been moaning about the tarnished state of out private pensions market. Pensions seemed owned by dodgy salesmen, operating on commission or by toffy-nosed geeks operating on the profits of large companies with bottomless budgets. Either way, the public’s perception was that the noses were in the trough and were likely to stay there.
Auto-enrolment has changed much of that and though one senior policy mandarin has recently declared auto-enrolment over, that is because she represents the tiny minority of employers who have staged and knows nothing of what is to come.
Since there is neither the inducement of commissions, or the sponsorship of the large employers, the auto-enrolment market seems a barren place for traditional advisers and providers.
But it is fresh ground for the entrepreneurs who are starting up, using new technology to disrupt the old stale practices and bring new life to a moribund sector
Auto-enrolment; a blessing (as well as a duty) for small employers?
The policy argument has been won, there is no capacity crunch as an army of worker ants in payroll, accounting, advisory and in the provision of the pensions themselves has mobilised.
What we are yet to see is fulfilment for smaller employers. The missing ingredient is the enthusiasm from employers, in truth we do not know whether this will arrive but there is an “if we build it they will come” feel in the house. That’s why today’s conference will be a sell-out.
The feeling’s like that before another great enterprise, the 2012 Olympics. I remember (and wrote about) being sceptical before the event and then surprised, relieved and ultimately overjoyed by what was delivered. People like me (who were no more than spectators) were brought into the project by the enthusiasm of the likes of Seb Coe, the organisation that preceded the event and the delivery of every aspect of the Games by an army of enthusiasts.
Workplace pensions are not as sexy as the Olympics , but they will have a longer legacy. What we achieve, or fail to achieve, in the next three years, will set the tone for the next thirty. It is vital that we enthuse employers and staff with the vision of a better retirement.
You work – you save!
This auto-enrolment hot-pot has now been a decade in the cooking. More energy has been spent in its planning than any other pension project I have been involved with. It is simply the greatest pension innovation of our generation.
It will not see it’s fruits ripen for decades (and a generation) to come. Those who are enrolled now on 1% and retire in the next five years will see relatively little from the project.
But for those who are young, and those like me who are older but recognise we have many working years left in us, auto-enrolment will be highly beneficial.
With auto-enrolment we can instil a savings culture for those at work in the UK which will become business as usual.
The rate at which we save is a conversation we have still to have, just getting us all “in” is today’s problem – and making sure that what we’re “in” is fit for purpose!