Remember what it was like in the first half of 2012 – Britain was fed up and just as “austerity” was biting, we had the Olympics! We couldn’t afford it, it was a pre financial crisis, it would be disruptive, it would be a colossal waste of money.
It turned out to be no such thing. If one thing has restored our pride after the shambles of the banking crisis it has been our capacity to put on a great show. The stadia were full, we performed well and the world loved our Olympics.
The Olympic bounce is still with us, just watch Sports Personality 16 on the Player.
We seem to feeling the same way about auto-enrolment. I remember the early IOD reports that predicted mass and deliberate non-compliance, I spoke with Alan Pickering who told me small businesses had no business being involved with administering pensions, I sat in a roomful of providers, none of whom promised to “play” after 2014.
Like the London Olympics, auto-enrolment has been embraced by ordinary people. Even Workie! The experts have (again) been proved wrong and 7m ordinary people are now part of our voluntary savings system. The experts are still predicting that the saving won’t be worth it for it will not get people to the high-water mark of pension provision, the imputed 2/3 final salary promise.
The conversation with a 69 year old guest at the Crisis at Christmas centre over Christmas, disabused me of any notion that saving isn’t worth it. If Brian had had but a few years of AE saving under his belt, his wish to stay housed would have been a reality. I totally refute the argument that it is not worth saving into a workplace pension in later years. I would point you to this blog. A tale so sad I cried writing it down.
But most people aren’t saving against destitution. They are saving to top up an improved state pension. We should be proud that at least a part of our huge national debt has and is being spent on pensioner poverty which is now well below the levels experienced in previous decades.
We have become a kinder country to our elderly, at least as far as state aid is concerned, and the private pension system we built in the fifties and sixties has delivered on its promises.
The personal pension system of the 80’s and 90’s has not fared so well, in the main as we moved away from collective provision and set our store by personal empowerment. That hasn’t worked so well.
Auto-enrolment can – to a degree – be seen as a return to collective endeavour. We’re all in. The young especially – the highest level of disillusionment (evidenced by opt-outs) is with those within touching distance of their state retirement age – these are those that personal and stakeholder pensions failed.
People’s Pension employer survey – more good news!
I was driven down this line of thought by a useful and timely survey from People’s Pension. I don’t think it has been fully published yet, but Jo Cumbo is doing her John the Baptist and preparing its way. The key numbers show that of the 638 employers surveyed 45% wanted to see auto-enrolment extended to cover the lowest earners , a figure that increase to 51% of employers that had actually staged.
That employers who have been through the “misery” of staging , become more enthusiastic, suggests an Olympic effect! For no sooner had the Olympics started, than we embraced it as a nation. I am not suggesting that 45% and 51% are off the scale as net promoter scores go, but these are numbers of employers who are saying they’d be happy to volunteer to do more and save more – I think they are amazing numbers.
There is a big difference between economic spending and behavioural giving. Economic giving demands a demonstrable return on investment (which Auto-enrolment will not give). Behavioural giving relies on its beneficial impact on society. If you don’t believe in society , you probably don’t believe in charity – there are very few of us who don’t believe in charity.
Sometimes, when I am talking to rows of arms-folded accountants on whom the operation of AE will depend, I sense they don’t quite get it!
It is odd that their clients – who foot the bill – seem to be keener on auto-enrolment than the accountants – who get paid by the bill!
Beneficial giving may not be in accountants’ DNA – perhaps we should include a copy of the Christmas Carol in their AE packs!
That auto-enrolment is tapping into this vast reservoir of beneficial giving should not surprise us at all. We have as a society a proud tradition of collective endeavour best expressed in the NHS and our welfare state. The great tradition of workplace pensions that has resulted in the 6000 or so extant private defined benefit schemes, plus the various funded and unfunded public sector schemes is an extension of this collective endeavour. The creation of a secondary structure of workplace pensions funded by auto-enrolment is a return to this voluntary principle.
As an employer, I am proud to be a part of the auto-enrolment project. Getting on for 10,000 employers who have used www.pensionplaypen.com have paid extra to get the right auto-enrolment workplace pension for their staff. Many have paid more to have a scheme like People’s Pension that meets the specific needs of their staff. Many have chosen a contribution scale that exceeds the bare minimum required by law.
I have seen presentations that suggest that the flows of money into workplace pensions have been smaller than predicted. This may be the case, I did not make the predictions nor the rules about opt-outs , postponement and phasing that mean that the tap is currently only half open. But I talk with a lot of employers who do not see auto-enrolment as a tax but as an opportunity to emulate larger employers and do the right thing by their staff.
Those experts who scoff at this, need to think long and hard about the alternative. Perhaps they should spend some time with the destitute and talk to those who -for want of a caring employer – have given up on retirement saving.