A call to action – but who defines “responsible”?

When I read this social media add from the Pensions Regulator I half thought tPR were encouraging employers to engage with their pension. No such luck – the pages behind the link explain the employer duties and responsibilities in the process driven way that has been so effective for the past five years, but hardly gets the juices flowing!

Meanwhile Aviva are (again) stoking the advisory flames by calling on employers to review the workplace pension decision they took when staging auto-enrolment.

I say “again” as Aviva said exactly the same thing in 2014! They even used the same news service.

This article asks just what are employer’s responsibilities to their staff- when it comes to workplace pensions.

It concludes it’s not about switching your provider, it’s about making the best of the provider you chose in the first place.

A secondary auto-enrolment market is about as likely as a secondary annuity market

I said it in 2013 and I’ll say it five years later, employers are not going to change workplace pensions in mid-stream unless they have very good reason to.

For the moment, all the major auto-enrolment players have unblemished records in the provision of pension services to employers large and small. The exception is NOW pensions and I sincerely hope that with Dalriada on board, they are in for a period of stability.

Last year, we (the Pension PlayPen) spent a considerable amount of time with Sage – exploring the appetite of employers to review their workplace pensions. There was some enthusiasm for a limited amount of governance but no enthusiasm whatsoever among small employers for switching pension providers.

Sage were surprised, I was not. Newcastle is the home of Sage, It is also the home of U-Switch – a business that makes it easy for people and businesses to switch utility suppliers. We are getting used to the idea of switching our gas and electricity suppliers but it has taken some years and a lot of Government intervention for this to happen.

Despite 30 years of portable pensions, the truth’s employers are no nearer being able to execute clean break pension separations than they were when group personal pensions arrived in 1987. The best that an employer can do is to redirect future contributions to a new provider, but for employees, this means two pots and all the fuss and bother of moving pot A to pot B.

Think of spilling a packet of tea around the house and having to hoover it up and that’s how hard it is to get all your current and former employers to move from one personal pension to another.

It’s no easier when you have your own occupational workplace pension. You might think that it was the easiest thing in the world to disinvest in provider A and move the money to provider B. Amazingly you still need an actuary to unlock the gate and let the money through! The actuary has to do due diligence on the transaction and you need to go through the rigmarole of telling everyone what’s going on. Most of these people no longer work for you so you’ll spend most of your time trying to find them. Winding up an occupational DC plan is no easy business.

Even if you are participating in someone else’s occupational pension scheme (a multi-employer master trust like NEST) moving to another workplace pension is far from easy. Before Christmas , Romi Savova and I spent some time with NEST’s customer service people trying to find out why it was taking on average 49 days to move your pension from NEST to another provider. It turns out that NEST, who as we all know have limited access to capital (ho ho ho!) haven’t invested in systems to turn round transfers on an automated basis. So even if you have a NEST account and want to move your money, you have to wait a couple of months for NEST to get round to it.

Imagine if you are an employer! Imagine how much more difficult NEST could make it for you! Go and find an adviser who is willing to help you shift your workplace pension and ask them what it’s going to cost in time and fees. Workplace pensions  are a million light years from a U-Switch culture.

The workplace pension market is as blocked as the U-bend after Christmas dinner!

So the message is that you really had make the best of what you’ve got. Auto-enrolment was a “get it right first time” market. If you are an employer who chose your workplace pension without researching the market , then let’s hope that the pin you stuck – wasn’t into the arse of a donkey!

Fortunately, it almost certainly wasn’t. Though there are quite a few smaller master trusts and one or two personal pension style workplace pension providers whose offering will look less and less appealing over time, I know of no scandals that have not been sorted out (and yes there were one or two back in 2014).

What we need to do is to make the best of what we have and that means putting pressure on our workplace pension providers to raise their game. If you are an employer with a workplace pension run by an employer set up as a group personal pension – then now is a good time to get in touch with their Independent Governance Committee. These committees are there to keep you informed about whether you are getting value for money and they are the ideal people to whom you can escalate any gripes you have about your and your employee’s member service.

If you are participating in a master trust like NEST, People’s Pension or Smart pension , now is a good time to start pestering their trustees about whether they think you are getting value for money. Of course they’ll tell you that you are , but don’t be fobbed off, if you find aspects of the service you are getting unsatisfactory, tell the trustees and see what they can do about it.

If you can’t move your workplace pension , at least you can unblock the pipe!

Why does this matter?

If you don’t think that your employee’s savings matter, then you are either a very heartless or very stupid boss – probably both!

Your staff have entrusted their pay to your workplace pension scheme for some time. In April they will see a serious hike in their contributions and there will be another hike the following April, after when your employees will be paying in  5% of their band earnings (hopefully less a bit of tax-relief).

At the moment, what’s happened to that money doesn’t matter. Your staff take it on trust that you’ve chosen carefully and that your are keeping a watchful eye on where their money is going.

There will come a time, when your staff start getting interested in their workplace pensions and then they’ll want to know if you’ve “got to know”, not just their duties, but the workplace pension itself.

You may not think it, but you are linked in their minds with ideas which go back the best part of a century and are engrained in British working culture. You are – as an employer – a benevolent paternalist, a trustee of their futures, the facilitator of their retirement. You – as much as the workplace pension you’ve chosen – are their pension provider.

You may feel that this not listed among the employer duties that the Pensions Regulator puts on its website. You are right. You are not liable for the outcomes of these workplace pensions – you are only liable in law for completing your employer duties,

But if you think that those outcomes don’t matter, and your staff find that out, your business will have a serious problem – not with the law – but with its human resource.

BE WARNED – PAY ATTENTION TO YOUR PENSION and act like a trustee – even if you aren’t. If you are an employee – give your employer a prod and see if he/she’s on the ball.

If you want help with any of the ideas in this article, drop Henry Tapper a line on henry.tapper@pensionplaypen.com and he’ll point you in the direction of your IGC- master trustee or your employer’s own trustee board.

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