“Workie Vicit” – tPR on the state of AE

  Screen Shot 2016-08-01 at 06.40.26

The Pension Regulator has published its snappily entitled Automatic enrolment commentary and analysis report 2015/16

The first question I asked as I opened its 45 pages was “who’s it for?“. TPR’s primary stakeholder is the DWP which funds it and I guess the high level infographics are designed to please those in power who like to be fed good news. And there is good news.

The Pension Regulator is not being overwhelmed, it has a largely compliant employer-set, and though the trend is upwards, this is only to be expected as employers are both more numerous and less experienced (in pension matters). Here’s the iron fist infograph.

Screen Shot 2016-08-01 at 06.47.35

The table that really matters is the revised staging table. This is the one that Government , Providers and advisers are relying on to plan resource around.

Screen Shot 2016-08-01 at 06.54.58

The revised estimate of staging employers differs radically from previous forecasts (tPR now estimate between 1.32m and 1.46m employers being subject to AE duties).

But although the total number of organisations to be bothered by Auto-Enrolment has decreased, there is little change in the number of employers who will need to put workers into a pension scheme, which will be up to 950,000.

The difference is in the numbers of employers reckoned to have eligible jobholders which turned out to be “owner directed” organisations with only the Owner as an employee. This group is excluded from auto-enrolment on the grounds of being “self-employed in disguise”. No doubt HMRC will continue to chip away at this group who are often thought”spurious” business owners by everyone and anyone.

It is a shame that we were sold a dummy, planning for these phantom stagers. TPR deserve some of the blame, though I suspect that they have relied rather too heavily on historic Governmental sources( ONS rather than RTI?).

One of the collateral benefits  of Auto-Enrolment is that we are getting a much better picture of how we work.

But although the total number of organisations to be bothered by Auto-Enrolment has decreased, there is little change in the number of employers who will need to put workers into a pension scheme, which will be up to 950,000.

The net impact of the work so far is to massively increase employer coverage; but the report is clear, the increase in employee coverage results from the low-hanging fruit in 2013-15. The impact of getting new employers involved has been less – the higher up the AE tree we climb.

Screen Shot 2016-08-01 at 06.51.30

The immediate future is a voyage into the unknown; only a tiny proportion of the 450,000 employers staging in the next twelve months have ever had to choose a pension for their staff and the next infograph suggests why.

Screen Shot 2016-08-01 at 06.47.55

So where’s the money going?

The big story here is that mastertrusts are becoming the bottom feeders of choice. Either out of deliberate strategy or from inexperience of the dynamics of small businesses), the insurers have gone from a position of strength (with nearly 40% of employers using GPPs

Screen Shot 2016-08-01 at 06.53.45

To a position of weakness with less than a quarter of new employers using GPPS

Screen Shot 2016-08-01 at 06.53.29

To fully understand how much things have changed, look at these numbers which show how occupational schemes (non master trusts) and large GPPs are being swamped by NEST, People’s, NOW and the new kids like Smart. These numbers are for the past 12 months.

Screen Shot 2016-08-01 at 06.53.04

I’m not sure that all those employers who are now using Master Trusts are fully aware of the implications of their choice in terms of scheme security and member benefits. The numbers are massively skewed by the Government’s promotion of NEST as a quasi-default

I remain deeply concerned by the quality of the decision making by employers, the quality of advice and guidance coming from business advisers and the lack of attention being paid to the pension by the DWP (and the TPR). 


What the Government wants you to read!

TPR want you to read their headlines

·        66% of all employees are active members of a pension scheme, compared with just 47% in 2012.

·        From 16 October 2015 to 31 March 2016, 185,107 employers completed the online Duties Checker.

·   And they’d like you to know that nearly 100% of the various stakeholder are now aware of auto-enrolment and what its about     

90% of Employers are getting Workie

Screen Shot 2016-08-01 at 06.40.13

Awareness and understanding of automatic enrolment is now almost universal amongst business advisers – and more than 9 out of 10 are now helping clients meet their duties

Screen Shot 2016-08-01 at 06.49.59

and Charles Counsell has a right to be chirpy

·       This is the first employers’ survey since large numbers of small and micro employers have began to visit TPR’s website for help in meeting their duties. It’s great to see such positive feedback, with 79% of the employers who used our website finding all or most of what they needed.”

Who’s this for?

I started out asking who this report was for, and ended up thinking it was for people like me. People who need to plan to help employers , advisers and providers avoid a capacity crunch. It’s for the providers themselves, who can confirm their own experience against macro-data from the country as a whole, and its for the intermediaries, the software providers, their partnering accountants and book-keepers, their financial advisers.

The report accepts that Auto-Enrolment is now an almost entirely intermediated business, this report is not aimed at individual employers, though separate statistics I have seen suggest that there is a substantial DIY element among micros (who don’t want to pay their advisers a bean).

And yes, this report is for those who read reports for a living. Those who will use these results to opine on auto-enrolment , to some extent , this report is for global distribution, for the eyes of the world are on the success of our auto-enrolment project and for once, we’ve got a good news story on our hands.

Screen Shot 2016-08-01 at 06.50.13

In line with expectations

But do we really understand the implications of the decisions made by employers?

Screen Shot 2016-08-01 at 06.52.52

I will only feel comfortable with tPR reports , when they start focussing on employer and employee engagement with what they are buying into. That may take some years, but it’s the ultimate measure by which we can judge success.

 

About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in accountants, advice gap, auto-enrolment, pensions and tagged , , , , , , , , , . Bookmark the permalink.

1 Response to “Workie Vicit” – tPR on the state of AE

  1. Henry,

    Thanks for another interesting and informative blog.

    When I first read table 11 in the report, I thought it said 98% of declarations of compliance in the 12 month period said they used master trusts. I looked a bit closer and it excludes contract based schemes.

    The heading “Non-master trusts” should be grouped “(Non-master) trusts” – i.e. trusts that aren’t master-trusts.

    It isn’t stated clearly in the report, but the giveaway is that the totals line on table 11 matches the “DC (trust)” line in table 10.

    Steven.

Leave a Reply