Auto-enrolment challenge: Bill Galvin, Pensions Regulator

It is perhaps an appropriate response given the volume and scale of change that has faced the sector in recent months and years, but when FTAdviser asks the chief executive of the Pensions Regulator what the biggest challenge facing the body is in the current market he simply laughs.

Asking if he could pick more than one - he is told he can not - Mr Galvin acknowledges that the pensions industry is currently facing numerous challenges but cites auto-enrolment as the “single biggest thing that has happened to the pensions industry for a generation”.

“As the regulator of that industry, it’s a big, big deal for us.”

He says that part of the regulator’s role is to ensure that 1.3m employers know what they have got to do, when they have got to do it by and understand the detail of the regulation so that they can apply it.

“It’s a big job. We have got a huge communications programme with employers. The biggest ones we are dealing with on a one to one basis; the mid-market we are working through with specialist; advisers and, at the lower end of the market, most people will turn to their accountant, their book keeper or their general sector body like the Federation of Small Businesses.

“So we have a huge communications job to try to get not just everybody aware to understand it but to give people the tools that we need to interpret the legislation.”

Mr Galvin admits that the change in the timetable for introducing auto-enrolment for small businesses - roll-out has now been pushed back until after the next election - was a “bit of a hiccup”, but he says the timetable is “back on track”.

“In an ideal world, we would have just kept going with the original timetable because it definitely introduced a delay in our programme of education/communications and whatever.

“But the reason for it was clear and the government made the decision to reduce the burden on smaller employers. Now they’ve published the revised changes so we are now back on track and it is all systems go.”

Opting out?

There has been lots of discussion around the opt-out rates for auto-enrolment. According to data from a Populus poll for the National Association of Pension Funds (Napf), one in three people are unlikely to stay in the workplace pension into which they are auto-enrolled.

Mr Galvin admits that these are individual decisions and the extent to which individuals opt out will depend on a number of factors. However, he remains sanguine about the likely drop-out percentages.

“You can’t put money away for retirement without giving up some consumption today. It’s just not possible and the incentive for people to do that is not always immediately urgent.

“So I don’t think auto-enrolment is going to prevent people who have a real desire to spend their money on other things.”