Darren Philp, Director of Policy and Market Engagement, The People's Pension
Small employers will need support to tackle the challenge of auto-enrolment (AE), and advisers will be at the centre of that support.
Why will small employers need support?
As you know, most small employers don't really understand pensions. Our research tells us that they'll face a massive challenge in getting to grips with their new AE duties. They want to comply with the law - but they'll need support to do so.
Small employers could be anything from a household employing a nanny to the next big thing. But they'll all need support. And our research tells us that they'll turn to the people that already support them, their financial advisers, to help them make AE work while keeping their homes and businesses on the right track.
Small employers need advice
At The People's Pension, we've spent a lot of time asking small employers what they want from an AE pension scheme. What we've found chimes with our experience. We've provided pensions to the construction sector for more than three decades now. It's a sector where a lot of firms are really small and need a friend to support them through the pensions minefield.
Both our research and experience tell us that small employers need... yes, you've guessed it. Support. They also want a solution that is simple and hassle free, and someone to talk to when, not if, they need help.
That's where trusted advisers come in if they want to support their clients through AE. But our research tells us that some advisers have concerns about the best way to do this, or about how to add value for their clients.
Pensions present a challenge for employers large or small
Our experience of larger employers staging for AE is that they've needed help too. But they often had in-house support, or could afford to hire external experts to help them through staging. Small employers are unlikely to have this resource, which is why advisers are so important.
Large employers had a number of schemes to choose from. For small employers, this is one task that's been simplified for them. The likelihood is that they'll be familiar with the household names in pensions, but these schemes won't accept small employers. There are only a small number of schemes, of which The People's Pension is one, that will accept all employers whatever their size.
Master trusts are a good option for small employers. They can offer the lowest cost solution, operate at great scale, and offer strong governance. But there are differences between providers - and the comparison of the available options that advisers can provide are important in helping small employers make the right choice for them.
Large or small, employers face similar challenges and ask the same questions. We know, because we've spent the last three years answering them.
Employers will need ongoing advice and support
As you know only too well, AE doesn't end with telling the regulator that they've complied. It's an ongoing duty, payroll run after payroll run. Our research and experience tells us that ongoing support is a must for small employers.
Most weeks or months, nothing different will need to happen. But then the person who ‘does AE' might go on holiday, or an employee might start maternity leave. All of a sudden there's a new question. And, more often than not, it'll be a time sensitive question that threatens to derail the whole payroll run if it isn't answered right away.
This is an area where large master trusts like The People's Pension can support advisers to support their clients. And since we launched The People's Pension in 2012, we've grown growth to 1.6 million members and 8,000 employers.
Advisers are the key, pension schemes can grease the lock
Advisers are central to making AE work for the up to 1.8 million small employers who are due to stage from January 2016 onwards.
At The People's Pension, we've worked closely with advisers for a long time. We know that our approach works, because most of the new employer clients who come to us arrive via intermediaries we've worked with before.
So, whether an adviser wants to develop a full AE solution for their clients, or whether they just want to signpost them to a pension scheme that could be the one for them, they are a crucial link in the chain.
Advisers know that working with a supportive provider makes it easier to unlock the door to AE success. Making life as simple and hassle free as possible for their clients will be the key.
