Why do employers who have taken the pain of implementing an Automatic Enrolment scheme feel the need to change providers often using the three-year re-enrolment anniversary as the driver to select a new provider for their Qualifying Workplace Pension Scheme?
There are some differing views from professionals as to the reasons for this disappointment and clearly, employers who are focussed on the day to day business needs of building their own business are not lightly moved to take the pain again without just cause.
Some providers seem to think that the key was the ending of commission and with that a need to move from a higher charged Certified scheme to lower charged Qualifying schemes. They believe that schemes are moving because of a desire to move to a lower charge option. Incidentally, they also believe that cost may also be a reason for schemes not moving since employers who wish to take advice no longer have the benefit of scheme transfer costs being paid by the members!
Here at AutoEnrollMe, we see things more from the employer perspective since we are not a pension provider but we do provide AE support to the advisers and their employer clients. We also are involved first hand in supporting clients who have come to the end of their tether and of course as part of that process they confide in us as to the real reasons why they feel the need to make changes.
Undoubtedly bad experiences and bad administration rank as the primary reason for switching providers. The problem is that most providers have not invested in providing the support services to facilitate good relations with clients. In many cases, providers believe technology is an ideal replacement for the personal touch.
It is a commonly held misconception that Automatic Enrolment is all about digital systems and that somehow payroll staff who may only work part-time can have the knowledge and understanding necessary to run a pension scheme without support. If all employers and the advisers who advise them had to do was press a button – why do they come to us at all? The answer is in reality very simple:
“People relate best to people – not computers”
Pensions can be complicated enough and certainly, we find advisers, payroll agents, and the employers they support are just looking for a one-stop shop for automatic enrolment which is light touch for their administration where they really can outsource with confidence to a knowledgeable team who makes dealing with automatic enrolment easier instead of harder.
We make it easier for advisers because we have first-hand experience of processing data for the major providers – we also understand corporate pensions from a practical sense. We are ideally placed to help advisers to understand the need and deliver the solution based on client needs.
Having agreed the solution advisers are able to outsource the entire process to our support. We deal with pension creation in our software, proactively work with employers and the payroll agent to configure payroll and project manage the switch to the new provider.
By dealing direct with payroll, we follow a well-proven process handholding the employer and agent every step of the way from a dysfunctional previous arrangement to a scheme that ticks all the boxes for all stakeholders.
Apart from administration and support, we fully appreciate that advisers also have other issues to consider since it is paramount that a good pension outcome for employees is also achieved. Again, based on our experience we find the following factors particularly relevant:
- Retirement Options – can members move seamlessly into drawdown without needing to transfer elsewhere?
- Default Fund performance and other investment options to allow a more targeted investment strategy
- Ease of transferring in individual pension pots from the previous provider
- Provider Facilitated Charging to facilitate consolidation or pension options advice
- Member online access to pension pots
If you are disappointed with your original pension provider or would like some specialist help on what you should do next, please do not hesitate to contact us.