Firing Line: Steve Herbert

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One of the unintended consequences of auto-enrolment has been the growth in camaraderie between rival employee benefits consultants.

According to Steve Herbert, head of benefits strategy at Jelf Group, traditional competitors in pre-auto-enrolment times are getting on famously in a bid to deal with the massive influx of work.

“We are in a slightly strange position, in that we’re not really competing with each other because there’s so much there,” he said. “We’re almost pooling resources to help each other as and when needed.”

Jelf and others are so inundated with work that benefits consultants are charging a premium to get everything done.

The challenge for advisers is that many firms approaching their staging date believe that because they have a pension scheme in place already they are nearly there. But according to Mr Herbert, they frequently underestimate how much needs to be done.

He said: “Let’s assume they have a scheme that’s suitable; they’re still going to need to make sure that everybody who hasn’t joined is notified and consulted and put into the scheme. If they want to come out of that scheme, they have to develop that process and provide the information to the regulator that’s needed. That’s a significant amount of work.”

Not everyone in the business community has welcomed the change, according to Mr Herbert. “[Some people] in senior management roles can be quite aggressive about it,” he said. “They don’t want to spend any more money on pensions – ‘What’s the value to us?’”

So far, the companies that have signed up are the firms with large numbers of employees who already have substantial HR and payroll departments in place. It is the forthcoming staging dates – April, May and July, for businesses with 249 employees or fewer – that are likely to cause the real problems.

“We’ve got this wave of much smaller companies, who by definition don’t have a big HR department or connection with the employee benefits world. All these companies are closing in on their auto-enrolment staging date, and most will be leaving it to the very last minute, by which time it’s possible that many will be turned away because we just don’t have the time.”

For these people, Nest will be the default option, but it may not be the best one. “It’s not necessarily a good solution for short-term savers close to retirement,” said Mr Herbert.

Mr Herbert has been in pensions consultancy for 30 years, and spends much of his time on the road telling people about auto-enrolment. He describes himself as “front of house”, and is as firm in his belief that it will work as he was seven years ago when he began talking about it.

He said: “If [auto-enrolement’s] prime intention is to save for old age, it will work. The idea that everyone goes into a pension scheme unless they opt out means numbers will go through the roof – it relies on inertia, which tends to work for the great British public.

“What it doesn’t achieve, and what is the next level, is engaging those workers to understand what they’re saving and what their investment choices are. The next step is getting people to save more. To retire, they need to have enough money to take that decision.”

This leads to another potential unintended consquence of auto-enrolment: a much older workforce. With the abolition of the default retirement age, people can choose when to retire, but many might find they don’t have sufficient savings to do so.

Mr Herbert said: “Unless there’s enough money to retire, people won’t retire.”

The important thing, he believes, is persuading people to put more money in over time – in incremental stages – and to find ways of getting the message across.

He said: “The next big step in the process is auto-escalation, whereby the employee and employer contribution goes up a little bit. It could be by legislation – it’s the one way that employers and employees can increase their contributions in a less painful way.”

Mr Herbert has been at Jelf for three years, prior to which he held a similar role at Origen. Throughout his career, he has worked in employee benefits, firstly as a consultant and then in communciations roles like his current one. He said that he likes “a bit of both, [because] compliance doesn’t really give me much latitude – you have to stay abreast of things and have qualifications.” He finds his current role of delivering presentations about auto-enrolment very satisfying: “We get people come back time and again, and the feedback is always exceptional.”

The question is, how prepared is he to help those worried about the Pensions Regulator knocking on their door?

“It depends very much on how committed they are to making it work,” he said. “If it’s a company that we can see are keen to make it work - a lot of it is getting your payroll assessment right - we’re willing to help them, but we might have to charge a premium.

“If someone comes to us and we can tell they’re looking for a scapegoat, that they want someone to take the rap, they’re going to struggle to find someone.”

Heaven help those who leave it too late.

Melanie Tringham is features editor of Financial Adviser