Auto-enrolment to boost corporate platform market
“Tremendous opportunity” for corporate platform providers to provide a solution for employers looking to manage employees’ benefits packages.
The introduction of pensions auto-enrolment will lead to huge growth in the corporate platform market, business advisory firm Deloitte has claimed.
Employers must start automatically enrolling all eligible employees into pension schemes over five years from October 2012. The largest employers will be first to introduce auto-enrolment and up to 8m new people will start saving into a workplace pension, depending on employee opt-out rates.
In its insurance market update, Deloitte said that corporate platforms will become increasingly important as employers search for a cost-efficient way to manage employees’ benefit packages.
Caroline Gardner, director at Deloitte’s financial services practice, said: “The corporate platforms market is still in the early stages of development. There are only seven corporate platform providers compared to 27 retail platform companies but the market is set for huge growth.
“Auto-enrolment will be the biggest change to the UK pension market for years; for the first time millions of people will be saving into a workplace pension.
“This is a tremendous opportunity for corporate platform providers because they will be able to provide a solution for employers looking to manage employees’ benefits packages in a cost efficient way.”
The first retail platforms were introduced in the UK in 2000 and assets under management grew at an annual growth rate of 16 per cent between 2003 and 2011, and about 85 per cent of financial advisers now use retail investment platforms.
Ms Gardner said: “The corporate market could experience similar growth. It’s estimated that there are £100m on corporate platforms and that this figure could double or treble over the next six months.”