Due to a steadily growing population and a population that is year on year living longer, the Government has decided to introduce automatic enrolment into workplace pension schemes. People generally need to be saving more during their working lives to ensure that they can enjoy the finer things in later life and have a comfortable retirement.
In 2017 alone there are around 850,000 SMEs (small businesses) that need to be enrolled into a workplace pension.
The vast volume of small businesses that need to be automatically enrolled have impacted almost all of the pension providers that have been supporting small businesses through this process. This has put huge strain on the resources of the pension providers involved, meaning that in many cases small businesses have not been able to have the pension provider of their choice, the setup of schemes have been rushed or things simply do not run to plan.
The Pensions Minister, Steve Webb, in 2012 saw this coming and stated that smaller businesses may have less choice due to these volumes and may seem 'less attractive' to pension providers due to their smaller size. Many automatic enrolment pension providers only want the larger, more commercially attractive companies. This has meant that explicit employer/employee charges have been introduced by many providers to ensure that these smaller businesses remain profitable for them.
Pension providers across the sector won't turn down business, but what we are facing is a situation where they price themselves out of the market through the introduction of these explicit charges. Dealing with pension providers which may have increased their costs and charges is proving frustrating for many small businesses.
A large proportion of employees accross many different industries are low paid. Owner-managers will have no previous experience when it comes to pensions. The language will be new, and their payroll systems could be complex - with monthly, weekly and casual worker pay runs – all adding layers of complexity.
This complexity is another reason why many Master Trusts / pension providers have introduced these explicit charges whilst the small nature of businesses in 2017 means that company schemes are just too much trouble for them to manage and support. This has put even more stress on those pension providers that are in the market of specifically supporting those small businesses.
We have seen Creative Auto Enrolment go from a free pension provider to one that charges due to these volumes. The support that they had in place simply began to fail due to the high volumes of small businesses setting up schemes with them. Consequently, they have now introduced a significant upfront charge and have also started heavily charging members. The member charge at the end of year one is equivalent to £24.86! Now: Pensions and The People's Pension have also followed similar routes.
We at Smart Pension have been aware of the capacity issue from day one and our portal has been specifically designed with this in mind. Andrew Evans and Will Wynne Smart Pension's Chief Executive and Managing Director, spent 18 months creating a seamless, free end-to-end solution for auto enrolment. They did this by spending time researching competitors, seeing what small businesses required and creating a portal that maintains itself using cutting edge technology. This means that there is very little that needs attention whilst making your clients compliant.
We have an exceptional support system using multiple teams that are on hand to support you and your clients when required. We have also prepared for the influx of SMEs that are due to stage this year bringing in additional employees to facilitate the rise.
Going on from Steve Webb's point in 2012, Smart Pension has no minimum or maximum limits on the size of companies we support – we support everyone. We are and will remain completely free for advisers/introducers and the employers. Smart Pension has been judged independently as the provider of choice and are currently the only Master Trust on the market.