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Auto-enrolment under fire from ShareAction

Auto-enrolment under fire from ShareAction

ShareAction has branded the current state of the auto-enrolment market ‘troubling’ and ‘uninspiring’.

Damning criticism from the group, which aims to improve corporate behaviour on environmental, social and governance issues, follows a report from the body in which it found not one auto-enrolement pension provider had managed to score half marks overall on its ranking system.

The report, which was the group’s inaugural work in the space, revealed Aviva took the top spot as best auto-enrolment provider.

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However, Aviva scored only 39 out of a total score of 80.

ShareAction’s chief executive Catherine Howarth, said it was important to note that all of the providers, except the People’s Pension, scored over 50 per cent on at least one theme.

She said scores of well above 50 per cent were achieved on governance, transparency and accountability, and responsible investment themes including arms and climate change.

“If you took the best scores from each provider assessed, you’ve got the makings of a very respectable performance, which shows that it can be done.

“That said, these results paint a pretty uninspiring picture of how the auto-enrolment market is currently performing when it comes to accountability to members.

“Not a single scheme has chosen to put a member whose assets are invested in the scheme on its board. We see this as very troubling.”

Ms Howarth added alongside the shifting of investment risk from employers to members, as defined benefit schemes closed and defined contribution provision took over, the last decade has also seen a significant shift in the UK pensions market away from trust-based schemes towards master-trusts and insurance companies.

Trust-based schemes require one third of the board to be member-nominated, but with master-trusts and insurance companies there is no such requirement.

Ms Howarth said: “There’s a vast amount of work to be done to restore some of the confidence, trust and understanding that is sorely lacking in the UK pensions sector.”

Adviser View

Daren O’Brien, director at Aurora Financial Solutions, said in his experience a lot of insurers’ auto-enrolment platforms are simply a reworking of their old group personal plan platforms and so the poor performance outlined in the report isn’t surprising.

He said: “It’s particularly worrying when the auto-enrolment providers have had so long to get their propositions and platforms in place before launching that they are still selling employees short with a bad user experience.”

ruth.gillbe@ft.com