The Government introduced automatic enrolment legislation as a means of getting as many people as possible into workplace pension schemes, to enable millions of UK workers to start benefiting from saving for a pension income, to fund their future retirement.
For Financial Advisers, this legislation seemed a great opportunity, as there would be thousands of employers in the UK that needed to set up a workplace pension scheme for the first time, or introduce a regulated and compliant workplace pension scheme to replace their existing non-compliant one.
A surprising lack of Financial Advisers
In fact, what happened was a very different story. Many advisers decided that auto enrolment could not be profitable for them. This led to many employers having to source their own scheme or enlist the help of a payroll bureaux or accountant, as a cheap and efficient way of becoming compliant.
However, this led to many employers choosing a workplace pension provider based on the cheapest and easiest solution with little thought being given to what workplace pensions should be about – great member outcomes.
Most payroll and pension provider systems now work well together. Over the next 12 to 24 months’ integration, speed and accuracy of systems will ensure a better employer experience. All employers will have set up their auto enrolment scheme. The emphasis will swing back to member outcomes – The Pensions Regulator is already turning its attention in that direction. Now is the time when advisers can show their value. Many employers will wish to review their schemes and advisers have more time to think about their approach. Employers (and accountants) will need to ask themselves some difficult questions such as:
- Is the master trust I selected transparent and financially sound? I chose it because it was free to the employer; will it always be so? Can it afford to be so?
- Is the GPP scheme I chose value for money for me and my employees? Do members need all those funds – who is advising them? It’s not a financial adviser. Are they making awful fund decisions? Are they just confused and thus not engaged?
- Who is offering my employees a pension pot consolidation service? Using an agreed process with the employer we are seeing advisers efficiently obtain information about members’ existing pots and delivering consolidation advice in the workplace through modest facilitated charging from the transferred funds. Employers see this as a real added value service.
- Am I up to date with workplace pension regulations? What am I supposed to be doing with regards to reviewing the appropriateness of my scheme?
Advisers that are efficient can add value to most corporate clients, regardless of their size, and do it profitably. It is time to help employers make better decisions – not just for themselves, but for their employees.