Personal Pension  

The missing link in financial advice

The focus and effort on the part of advisers and providers to support their early-staging clients was all consuming, and even now many IFAs have only staged a handful of their larger clients – with the tsunami still looming down upon us.

But for some employers emerging from the other side of AE, those brave few are starting to ask the question: “what next?”

A number of generally larger and more paternalistic employers were early adopters of corporate platforms, but for many employers they remain unchartered territory.

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Corporate platforms do, however, offer a potential solution to several of the challenges that both advisers and employers are facing in a post AE world.

A few months ago I was engaged in a discussion with a number of employers. Perhaps understandably, those who had staged were recalling how challenging it had been, but one of the less obvious challenges they spoke about was communicating the changes to their workforce.

Not for any of the regulatory or logistical reasons you might assume, but rather due to the low level of financial literacy they had found among their employees.

This complaint was common across a range of industries. Areas you might expect such as retail experienced this challenge, as did others usually regarded as ‘professional’ and often assumed to have a higher level of engagement in financial matters.

For these employers, the answer to the ‘what next?’ question was clear. They needed to find a way to educate and inform their staff not just about pensions but about a range of financial matters. Enter the corporate platform.

The term ‘corporate platform’ has been banded around quite readily for some time, as an extension of those in the individual market, but there remains little consistency in exactly what the term means.

For me, ‘workplace savings platform’ is a more apt title – a portal that workers can access via their employer that addresses a range of financial education and savings needs.

And it would seem if my discussions are representative, this is exactly what employers are looking for.

Certainly this is borne out by experience at some providers. Some have continued to see the take-up of our corporate platforms growing steadily over the past couple of years.

Crucially, though, some of the larger clients are coming back to providers with the express desire to implement it now the dust has settled on their AE experience.

I firmly believe that workplace savings platforms will come of age in the post-AE pensions landscape, and here is why.

The characteristics and sheer volume of those entering the pensions market are changing beyond all recognition. Gone are the days where those saving for their retirement were sufficiently engaged that they had at least chosen to join their company scheme.

Even then most members found themselves in the default fund with no real consideration of their long-term savings other than a cursory glance at their annual statement.

Now we have millions of people entering pension saving for the first time on minimal contributions, and the only thing we know for sure about their level of knowledge and engagement is that they have not chosen to opt out.