This blog takes me back to the last decade when I spent much of my time producing evaluations of providers.

A long time ago, before I was a pensioner, I used to work with large numbers of employers through Sage – the payroll and software suppliers to hundreds and thousands of employers.

Here’s the kind of software we offered though Sage. It helped employers choose the workplace choose the workplace pension that best suited them. Being at the top of the list didn’t make  the best provider, it just said the the provider the best for the needs of the employer.

So how did the software help choose the provider? Well there was no bias, there was a lot of data analysed by First Actuarial which marched providers to employers using the answers to questions provided by the employers.

It was simple and what came out were due diligence reports that are still kept by employers today to explain to staff why they chose whoever they chose. We included almost every workplace pension provider who accepted money via auto-enrolment. There were a few we grassed up to the regulators because they were fraudulent and from time to time we had difficulty getting information from the provider.

We charged £100 to Sage employers for using the service and getting an actuarial certificate confirming the basis of the decision. Value for Money was a big issue for employers and most could choose Nest without anyone questioning the decision.

Value for money again

The decisions an employer took from 2012 to 2019 when we ran Pension PlayPen put  small emphasis on the capacity of the pension scheme to pay pensions. If you have a further 12 minutes to spare, you can see what an employer needed to go through and some of the software took them through setting up the auto-enrolment compliantly

We spoke to a lot of employers; they  got a lot out of working out what was best for staff.

We now have a situation where the issue is not who staff should save with but who is going to be the right provider to help staff spend their money. Most of the money that Pension PlayPen helped employees save is still in the plans chosen by the bosses at the time their company was “staging” auto-enrolment.

Of course the questions that employers could be asking their staff about what mattered most. Would it be the rate of income provided from the savings? Would it be the certainty of payment at the agreed amount or would it be access to the pot from which the pension was paid?

The principal that Pension PlayPen worked under was simple, what best met the requirements of staff was reflected in the recommended choice of provider. This system was based not on opinion but on an agreed system of “value for money”.

The Pension Regulator and FCA stated to Pension PlayPen that what it was doing was not advice. It was a statement of value for money based on research by actuarial analysts.

We should consider the lessons of auto-enrolment, not just in take up and compliance but in the amount of care that many employers took to choose the pension for their staff they considered best value for money.

Should we abandon the employer as guardian of the employee’s best value? I think we should be encouraging employers to take an active interest in pensions again.

Some people talk of pensions as deferred pay. Employers choose your pension plan and from 2027 those plans must swap your pot for a wage for later life. You could get a pay cut, you could get a pay rise, employers hold the keys.