PensionsOct 28 2013

Auto-enrolment survey: Who’s in?

      pfs-logo
      cisi-logo
      CPD
      Approx.40min
      pfs-logo
      cisi-logo
      CPD
      Approx.40min
      twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
      Search supported by
      pfs-logo
      cisi-logo
      CPD
      Approx.40min

      People do not save enough for their retirement. And the government does not want to pick up the tab. Hence the silver bullet: auto-enrolment.

      It’s the biggest shake-up to pensions legislation in years and has been a long time coming. Finally, the government has realised the ageing population cannot support itself if it does not have the resources to do so. Everybody must save into a pension. Unless, of course, they opt out.

      Leaving aside the obvious flaw in auto-enrolment – that (eventually) saving 8 per cent of band earnings of £5,564 to £42,475 will rarely provide enough for a comfortable retirement – the general public is, at least, becoming slightly more engaged with pensions. A high-profile ad campaign with familiar faces such as businesswoman Karren Brady has surely done no harm. But with 11m people to potentially be signed up by 2018, enrolment is no small task.

      So how is the industry getting on so far and where is the opportunity for financial advisers?

      Opportunity knocks

      Any pension provider can offer a qualifying scheme for auto-enrolment purposes. The ABI publishes a list of its members that offer such schemes, which we contacted along with all other pension providers on our database to get as many relevant schemes as possible.

      A few chose not to take part in our survey. Fidelity said it could not participate as its defined-contribution team was “extraordinarily busy”; Prudential said it offers auto-enrolment schemes but has stringent technical criteria and would have to include so many caveats that completing the survey was not realistic; and we did not receive a response from the Railways Pension Scheme, despite repeated requests.

      A total of 11 providers are therefore included in the survey. Table 1 shows basic information such as minimum employers, contributions and charges. Most providers said they priced on a scheme-by-scheme basis, so did not provide actual figures. There is a good mix of trust- and contract-based schemes and, on the face of it, the minimum number of employees accepted is generally low across the board, starting at either five or having no defined minimum.

      One provider that looks slightly out of place is Zurich, which sets a £500,000 minimum for total annual premiums but says its minimum number of schemes is 100. Zurich explained this by saying it is not targeting the smaller end of the market but would not provide any further information when pressed.

      PAGE 1 OF 6