TAP Assist

Capacity crunch – Providers are turning away AE business

“Pension providers have been accused of “misleading” advisers by turning away automatic enrolment business they had previously agreed to accept” according to an article in Money Marketing. 
Disappointing, dishonest, scandalous, shameful, take your pick, but one word we certainly cannot use is “Surprised”.

This time last year Towers Watson released a report “Pension Auto Enrolment – Provider capacity” that stated by the end of 2013 the market would already be running at about 7 times the normal capacity for numbers of employees “placed into a pension scheme”. In 2013 there were around 6000 employers who went through their Auto Enrolment staging date. In 2014 there are around 35,000 employers…. That is around 7 times the capacity requirements again over and above what was required for 2013…

Let’s not stop there (it gets even more exciting!), have a look at the numbers that are going to be staging in the coming years….The tPR has just release forecasted quarterly figures for the coming fiscal years.

So based on an April to March calendar we see the following numbers;

2014/2015  = 32,000 – NB there is a weird drop off from August 2014 – December 2014 we will only see 1,200 companies staging!
2015/2106 = 152,900
2016/2017 = 617,000
2017/2018 = 533,000 

Even if these numbers were evenly spread out through the year, we are still talking about 50,000 schemes EVERY MONTH in 2016/2017. I say “even if” because as we all know they are not spread out through the whole year and on numerous occasions there are over 100,000 companies staging each time.

As I said at the start, it should come as no surprise that capacity was going to be an issue. It should also come as no surprise that providers are “cherry-picking” which scheme they want to load […]

Auto Enrolment Predictions for 2014

So there are nearly 10 million people are now in some form of workplace pension, over 2.5 million of those people are due to Auto Enrolment – although it has been suggested by Towers Watson (in an FT Adviser article) that figure could be much higher due to the methodology used to only count employees registered at staging date i.e. it does not count the new recruits to a firm or people who were joined through contractual changes to their employment contract and were “enrolled” before the staging date.

So a few predictions for 2014 – this is based on personal experience and knowledge, please feel free to comment.

Opt out rates will increase

We have seen substantially lower opt out rates than were predicted. Some predictions were around the 30% mark, where we have seen rates at around the 10% mark. While I do not believe we will see 30%, I do think we see a rise to somewhere closer to 15-20% as smaller firm start to Auto Enrol their employees.

This will be because of a number of factors:

Employee engagement will not be as good
Owner manager businesses may not be that positive about Auto Enrolment
No concerns about their brand and social standing/responsibility
Potentially the wrong advice from the wrong people – we have spoken to a number of owner managers who have said “I will tell them what to do, they always listen to me…” (NB yes I know this is inducement, but it will happen!)


Unfortunately there will be some fines this year, with over 30,000 employees due to enrol in 2014 we will see a number of fines handed out. We never had any fines in the first 15 months, but we did see a few notices […]

Auto Enrolment Capacity Crunch….Scottish Life Announcement

We mentioned in our previous post there has been widespread predictions of an impending auto enrolment capacity crunch.  Running the risk of saying we told you so……well you get the idea.

Scottish Life today became the first Provider to finally admit that there is indeed a ‘capacity crunch’ and they will turn away any businesses that are less than 6 months away from their staging date unless they adhere to very strict conditions.  This includes clients who already have a Scottish Life pension arrangement!  We are confident that they won’t be the first Provider to set these sorts of parameters and make these announcements.
So what does this mean for Advisers?  Well it illustrates the need for the following:

You should be speaking to your existing clients now!  Many auto enrolment solutions can be put in place straight away but not paid for until the staging date is reached – why wait?

We would suggest looking at independent solutions away from Providers to avoid the worst of the fallout but also to ensure complete impartiality and allow the employer full control over compliance and data

Be proactive in promoting your business as a place Employers can turn to for help.  There will be many Employers who have underestimated where they needed to be in order to be compliant.  You should be out there marketing your business to help these guys and grow your business!

If you know you should be doing all the above but are scratching your head and feeling overwhelmed then please get in touch.  Our services are perfectly aligned to help Adviser businesses and take the burden of Auto Enrolment off their shoulders.  It is now becoming apparent that the Providers will not be in a position to […]

The capacity crunch and auto-enrolment

Why independent solutions are needed in the market place.
This is an interesting article from employeebenefits.co.uk that puts forward some valid points concerning the resources within the mainstream pensions industry and its ability to provide pensions and by default Auto Enrolment (AE) compliance solutions for employers. TAP Assist has long advocated that an adviser cannot justify making a pension recommendation based on the AE compliance solution that a pension company offers. An independent compliance solution that is not tied to a provider will allow the employer to have control of their compliance and data  regardless of the pension solution(s).

TAP Assist has been created to offer a comprehensive and flexible set of support services encompassing all areas of Sales, Marketing and Implementation which will allow the Adviser to concentrate on their core financial services and offer a fully independent solution to their clients.

We can also help you avoid the capacity crunch with our new AE Ready solution, please get in contact if need any help with Auto Enrolment.

Original Article:  http://www.employeebenefits.co.uk/benefits/pensions/pensions-auto-enrolment/opinion/the-capacity-crunch-and-auto-enrolment/102233.article