Automatic enrolment  

Service issues are driving secondary AE market

Service issues are driving secondary AE market

Companies and advisers hunting for a better service are fuelling the auto-enrolment secondary market, Aviva has claimed. 

The firm received 1,200 calls during 2018, representing a 80 per cent year on year increase.

It stated 90 per cent of the calls were from advisers. 

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Aviva stated the level of service and having a point of contact at their provider were two of the main reasons advisers were looking to switch, as was price, with many small and medium sized businesses re-assessing their current arrangements in advance of the rise in minimum contributions in April. 

Aviva cited merger and acquisition activity among businesses was another reason for the increase in enquiries. As one business joins another, the likelihood is they would adopt a single workplace pension provider, it stated.

Malcolm Goodwin, head of workplace savings and retirement at Aviva, said: "SMEs and their advisers are now starting to understand that when it comes to their auto-enrolment provider, they do have the freedom to switch.

"Many businesses are now three years or more into AE and they are starting to look at what is being delivered by the scheme they originally signed up to.

"AE minimum contributions are rising again in April. Now is a good time to examine what is in place and ensure it is still suitable. SMEs are free to shop around for a workplace pension provider that is best for them."

Andrew Pennie, head of pathways at Intelligent Pensions, said it was good that people were questioning their providers. 

He said: "AE presents significant challenges and additional workload for employers and if a scheme isn’t delivering on service, engagement and automation, then it isn’t surprising employers and advisers are looking at alternatives.

"Enquiries are one thing, it would be interesting to know how many employers have actually switched AE provider. Is the disruption and additional workload worth the effort or are the obvious barriers to switching simply stopping employers from trying?"

Helen Morrissey, pensions specialist at Royal London, added concerns over quality of service had been a common reason cited to her firm by advisers considering a move. 

She said: "Auto-enrolment has proved a massive learning curve for both employers and providers and it is quite right that employers are re-assessing their options to see if their current provider remains the best fit for them.  

"At Royal London we have found that an important reason for employers to switch their scheme to us has been concerns over quality of service at their original provider.   

"We also need to remember that the run up to auto-enrolment was very pressured for many employers, particularly smaller ones who may not have had the support of an adviser. They may well have found that they were forced to make decisions quickly that they want to revisit."

In October 2018, when Aviva initially reported the surge in enquiries of this nature, the firm anticipated more frequent calls from advisers and companies.