Personal Pension 

Every dog has its day

Something to shout about? Well I suppose so. The average opt-out rate of just 9 per cent is far lower than the naysayers predicted. That is one in the eye for them, that is for sure. This is not Stakeholder all over again. Nothing like it. It is not a disaster. It is a success and it has already delivered us a million new pension savers.


That is headline news if ever anything was about pensions (apart from the Maxwell stuff). So it is not just the Olympics and the cricket and the tennis we are upbeat about; pensions gets to have its day in the sun too.

But those of us who have spent the last seven or so years wondering how on earth we are going to get the employees of SME and micro firms to engage with auto-enrolment and get pension-happy know the hard bit is still to come. There are three auto-enrolment challenges: the large employers, the SME firms and the so-called micro-employers. Of the 1.3m employers who are duty-bound to implement auto-enrolment of their eligible employees into workplace pension schemes the vast majority, nearly 1m, have fewer than 10 employees. Auto-enrolment has got more to do with chip-shops than national supermarket chains.

Phasing auto-enrolment starting with the largest employers and ending with the very smallest never seemed sensible to me, especially as the phasing lasts over so many years. The employers most likely to be already running pension schemes got to go first while those most likely not to have any workplace pension in place get to go last, meaning millions would miss out on crucial years of pension saving while they waited their turn in the queue.

The idea was that valuable lessons would be learned from the staging of the large employers that would trickle down to help the SME and micro firms. But surely that was never serious? The main lesson learned so far, and this report and that of the Pensions Regulator bear this out, is that where firms already have experience of running pension schemes and have departments of CIPD-qualified human resource professionals tooled-up with sophisticated HR software systems - who are also able to call on external professional help from benefits consultants with access to sophisticated middleware - then auto-enrolment is a piece of cake.

Where it will not be a piece of cake will be when it hits the cake shops on the high street.

Having proved that large employers who already have pension departments and decades of experience of running pension schemes and communicating with their employees about workplace benefits in general, can top-up voluntary scheme membership with something much akin to compulsion we now have to get on with the real job of rolling out auto-enrolment in the real world.

By April next year every firm with 50 or more employees in the UK will have been served their one-year notice of auto-enrolment by the Pensions Regulator. It is as such notices have been hitting the doormats of firms with between 250 and 500 employees over the last few months that most IFAs have begun to wake up to what is about to happen.