By now we were due to be in trouble. There was talks of Tsunamis and capacity crunches. Nostradamus had nothing on the industry commentators saying that we wouldn’t cope; we’re coping.
I go to events and ask participants, how’s it going? People who were supposed to be swamped turn round and say “busy” – with that look that says “we’re making money’.
The major software houses, Sage included, have upgraded their pension/auto-enrolment modules. They continue to train employers and bureau managers in auto-enrolment compliance. Dare I say it, they are even promoting software to help pick pensions.
NEST is showing no signs of strain, a recent site visit we conducted showed processes working well and hardly a sheet of paper in sight. There have been one or two insurers, notably Legal & General, who have reduced capacity, but there have been new players like Smart Pensions , which have stepped up to the breach. Interestingly we’ve seen L&G invest in Smart Pensions as it looks to broaden distribution through dedicated master trusts.
Finally, and thankfully, we are seeing technology being implemented. APIs are being built between software and providers. Pensionsync are proving the National Grid when it comes to digital pipelines. But even the smallest employers are getting access to the latest technology – through the new cloud based systems that provide start ups with compliance for free.
You asked how Auto-Enrolment was going, and from a compliance perspective it is going well. Opt-outs remain under 10% and while notices issued by the Pensions Regulator have increased nominally, they have not increased proportionate to the numbers of employers staging. We are within the regulatory tolerances that deem Auto-Enrolment a compliance success.
We are now well into the second half of the auto-enrolment timetable but have yet to stage one quarter of the employers who will run a workplace pension by 2019. The Pension Regulator has revised downwards the numbers of employers that will provide employees with pensions but the numbers staging remain at 1.5m (with an estimated 500,000 employers staging without having to establish a workplace pension).
The most significant relaxation in the Pension Regulator’s stance has surrounded owner Directors who – at the employer’s discretion, can be excluded from joining a scheme – provided that they are not being waged. Additional relaxations include the capacity of an employer to exclude from enrolment , employees with protection against the lifetime allowance. The Pension Regulator is proving to be a pragmatic Regulator.
For all the indignation we have for the big fella, Workie seems to be Working. Workie has survived the loss of a pension minister and remains Ros Altmann’s most visible legacy. We will find out this autumn what her successor, Richard Harrington, will keep of here Pensions Bill and whether smaller master trusts will be squeezed by new regulations requiring them to be better capitalised and better run.
The Government is committed to reviewing Auto-Enrolment in April 2017 and I am sure that everyone who has been involved in its operation will have ideas about how it can be made easier. But we must remember that rules that may seem irrelevant to us , are vital protections to others. The scale of the project, encompassing the likes of Marks and Spencer to the fish and chip shop, means that a single set of rules must be complex.
There are many who would like us to move to a system without opt-outs where contributions are compulsory. But we must remember the good that opt-outs do and the value to our personal liberties of the current approach.
Perhaps the biggest worry is the lack of engagement between ordinary people – and ordinary employers – and their pension pot. Hopefully this will increase as contributions and assets grow. Let’s hope that when people start paying attention to their (workplace) pension, they will get a pleasant surprise.
For that to happen, we need Workie’s that are not just good at taking our money, but good at investment and expert in paying our money out when we stop working.