I’m very pleased to see Standard Life’s announcement that its “Good to go” proposition is now part of Sage’s Data Exchange initiative. The news grabs headlines in the Scotsman and it should be headline news down south as well!
Employer’s needs have been ignored by most pension experts in the evaluation of workplace pension value for money, it is good to see Standard Life going digital. It will make its proposition a lot more employer friendly.
A cheaper means of processing pensions through payroll, frees up time for employers to be more productive. It also frees up cash for employers to do more to promote workplace pensions and afford the increases in contributions that arrive from April of next year.
I note that purchasers of a new Standard Life before the end of August get 50% off the product “employer charge” for life. This is a good deal.
What is the Sage data exchange?
The Sage data exchange is part of Sage’s initiative for the small businesses it provides payroll services to. The extension to its Sage 50 product, known as its pension module, enables SMEs to process auto-enrolment compliantly. The Data Exchange facilitates data transfer between payroll and pension provider through API technology, replacing a CSV file upload with a straight through process.
Including Standard Life in the Data Exchange means that employers that use Standard Life’s workplace pension and the Sage pension module will be able to process auto-enrolment data at the click of a button.
So far, only a handful of providers (including NEST) have the capability to be included on the Data Exchange, I look forward to more announcements from insurers and master trusts in the next few months.
Why does this matter to Standard Life?
Standard Life offer a high quality workplace pension (Good to Go) but it is expensive to run and has not proved competitive with smaller companies. By integrating with Sage in this way, we’d hope to see the cost to employers of working with Good to Go fall.
Normally lower prices are bad news for insurers, but in this case the cost of processing payroll is less for insurer and employer and we see scope for Good to Go become lower priced and more profitable!
Sage are by far the biggest provider of payroll services to smaller companies in Britain and launching this “API link” with Sage is a smart initiative. It gives Standard Life access to the 200,000 direct employers who use Sage software and the further 400,000 who use Sage software via payroll bureaux (typically run by accountancy practices).
Why does this matter to Sage?
Sage recognise the gap in the market created by auto-enrolment for pension support. Sage sees employers as having choices between different pension providers and is determined to create a level playing field so that employers choose on the value for money of the pension, not the ease with which the pension can be accessed.
Putting Standard Life, NEST and the other leading providers who will shortly be on the Data Exchange on equivalent access means employers can take decisions based on member outcomes rather than immediate costs.
Sage have appointed Pension PlayPen as the organisation to help their customers make that choice – Standard Life will be up-rated on http://www.pensionplaypen.com once we have completed our due diligence on the new service.
Sage can rightly be praised not just for making auto-enrolment easy, but in making choosing a pension easy too. Sage are market-leading in these respects.
Who are the losers?
Inevitably some insurers and master trusts will miss out as a result, choosing not to participate. This may have longer term consequences than the loss of business opportunity between now and the end of the initial (sales) staging period (which is coming to an end). Insurers with existing business using Sage software will struggle to remain competitive over time if they don’t use the new platform.
It is not good for workplace pensions to have a two-tier market with progressive providers working with Sage at one pace and tardy providers lagging behind. So we hope that all insurers and master trusts in the market will follow the lead of Standard life and NEST.
Who are the winners?
It is cheap to say “auto-enrolment is the winner”, but I just have – so there you are!
Frankly the long-term viability of auto-enrolment depends on Fintech companies like payroll driving the employer compliance costs through initiatives like Sage’s Data Exchange and providers responding as Standard Life have.
Auto-enrolment offers ordinary people working for small companies a right to a workplace pension managed by their employer and subsidised by the employer by way of contributions. It is a very good thing for almost every employee in the country and it may even include the self-employed (if manifesto pledges are to be believed).
Employers have a choice of workplace pension and Standard Life’s Good to Go is one of a number of good choices available at outset or as an option for an employer to switch to later,
I’m very proud that http://www.pensionplaypen.com is available to all Sage users who wish to choose a pension at staging.
Sage are keen that we continue to provide good quality information to employers beyond staging and I hope to work with Standard Life and others to make sure that products like Good to Go can demonstrate their value using our comparison service.
This is how employers will manage pensions going forward. I am proud to be associated with this way of doing things.
Well done Sage, well done Standard Life.
Standard Life press release https://www.standardlife.com/sites/dotcom/news-and-publications/2017/23052017-sl-partners-with-sage.page