You’d be forgiven for having forgotten.
What with George Osborne’s retirement options liberation/the anticipated upturn in sales of sports cars, the impending cap on charges, the removal of differential pricing between active members and leavers, the phasing out of legacy commission, the mandatory disclosure of investment transaction costs. Not to mention a raft of new standards to consider if a workplace pension is to qualify for automatic enrolment.
Europe’s latest IORP paper almost went unnoticed in all the furore…
Funny thing is, we’re now into April: the first stage of the biggest ‘pensions summer’ to date. I can’t predict the weather, but I can say with confidence that it will be stormy in terms of pensions activity. Over the next four months, around 30,000 employers will need to establish a qualifying scheme, irrespective of whether they defer enrolling their employees for a bit. That’s around one scheme every six minutes, I worked out.
That starts today, 1st April.
This is the first proper test of whether we really will have a capacity crunch. I wonder how many employers due to stage in April are actually feeling they’re on top of things; I sincerely hope it’s the majority. The predictions of how many have prepared, how many will take advice and how many will even champion the cause are about to be tested. And the capacity and appetite from advisers, accountants, providers and payroll firms is now also under the spotlight.
The Government has largely outsourced to the private sector a social policy to get people saving, and we have a collective responsibility to demonstrate that we can deliver on that. Albeit a Government conceived scheme, NEST clearly forms a very important part of this framework, too.
Aside from all the recent changes, the need for a streamlined, off-the-shelf proposition has never been greater. One thing we can be reasonably sure of is that however engaged an employer may be in meeting their pension obligations, their top priority will be running the business. Collectively, we need to make it as easy as possible for them to do that, removing as much hassle for them as we can.
Our immediate priority now must be the continued success of auto-enrolment through what will be a challenging summer. The Budget changes may just help us here, if people feel more enthused about pensions. Maybe we could maintain sub-10% opt out rates amongst smaller firms?
That’s not a prediction; it’s an ambition. I’m an optimist.
I think we can engage people, but I recognise the challenge and that some say that pensions are simply dull. Many say that the word ‘pension’ itself is the problem and that we need to change it. I get that but, oddly, people in the States talk about their ‘401k’ which, as far as I know, is simply a reference to the section of legislation under which they’re written.
So that brings us to the next change we need to prepare for. We were already close to banning the word ‘pension’ and the consensus now amongst industry professionals in the UK is that we should change it to ‘2014b’ to reflect the changes in the Budget which have spawned the renewed interest we’ve seen in recent days.
From what I’ve heard, this change will be made imminently – but not this month, as the schedule for April’s full.