As auto-enrolment evolves, SMEs and their employees look for advice
Auto-enrolment has been going for six years this month and the take-up so far has been very good. But auto-enrolment is a marathon not a sprint. It is an ongoing process, and the next round of contribution rises are now only 6 months away. So will the momentum be maintained and what should employers be doing to help the process? And is now the time to review your pension provider?
According to The Pensions Register (TPR), 84% of employees have so far signed up into their workplace pension scheme. In its annual commentary and analysis report, released in September 2018, it also claims that around 100,000 new businesses each year are putting staff into a workplace pension from the start of their employment. The report further stated that the amount saved into pensions by eligible staff increased to ?90.3bn in 2017, up from ?86bn in 2016.
The expected dropout when auto-enrolment minimum pension contributions came into effect last April also did not materialise amongst SMEs, according to data from TPR. More than 90% of SMEs said that no staff asked to leave their workplace pension scheme when contributions were increased, according to a research study amongst 300 micro, 300 small and 200 medium employers.
This all bodes well going forward, but next April there is a further contribution hike and again this will need to be managed.
In addition and partly as a result of the auto-enrolment success story so far, there is an increasing demand from employees for retirement planning advice. According to research by financial services organisation State Street Global Advisors, 81% of respondents who are currently working and do not plan to retire within the next five years expect their employer to make them aware of the options they will have in retirement, while 65% expect their organisation to provide consultation and advice. 42% also expect their employer to recommend a solution that is specific to their needs, whilst 20% want their employer to provide a solution for them.
These are obviously areas where Kellands Corporate can help owners and directors.
On top of that, as the auto-enrolment market evolves, there has been an increase in the number of SMEs looking to switch their workplace pension provider. According to data from Aviva, there has been an 80% increase since 2017, and they expect the number of switching inquiries to grow further.
Many SMEs have had their schemes for a number of years, but now recognise the possible shortfalls of the scheme they selected at the outset. Now that they are more comfortable with the administration and compliance duties and are handling these adequately, they have had time to look at the wider picture - the pension schemes on offer and the benefits and options for their employees. It makes sense for SMEs to do so, as the previous Kellands Corporate article shows.
Again, when it comes to switching pension provider, this is where professional financial advice comes in.
So if you are an SME looking to switch pension provider and/or looking to provide a retirement planning service to your clients, Kellands Corporate can help you.
Contact Kellands Corporate today to find out more.