It is a decade since the 2008 Pensions Act set out legal duties for employers to provide retirement provision for their staff through auto-enrolment.
Now the idea of employers needing to enrol their workers into a workplace pension scheme that meets certain legal standards is firmly entrenched.
But nevertheless, employers need to assess their pension provision.
Every organisation needs to have comfort that their scheme is well run and fully accredited.
Finance directors, who take a key role in overseeing the take up of auto enrolment and provision of a workplace pension, need to have confidence that the scheme is delivering on its aims.
Given that FDs and other finance leaders are taking on a greater set of responsibilities in their organisations, having certainty around the delivery of the scheme is hugely beneficial.
On the right track
Helen Dowsey, Director of Employer and Intermediary Experience at NEST, says there has been a huge achievement in employers bringing employees into pension saving.
Reflecting on the degree of success since the first employers came on board in 2012 in gaining initial enrolment of workers – the staging period- Dowsey says: “We now have about 10m workers who have been enrolled, a large part of the success has been due to the fact we’ve had very low levels of opt-outs. Opt outs are people who have been automatically enrolled, and who have chosen to come out within the first month,” she explains.
When it comes to the next stages of auto enrolment, – the phasing process, in which the minimum contributions increase, Dowsey is very positive. She says initial findings show there are likely to be high retention levels for the two phases, the first where employers contribute 2 percent out of a minimum contribution of 5% in the year to 5 April 2019 and the second in which they contribute 3 per cent out of a minimum 8% the following year. “Early indications are of very low levels of opt-outs, and just as importantly, very low level of members ceasing contributions,” she says.
At the moment pots are relatively small, but they will increase particularly with phasing, over the two years,” she says.
Getting it right
One of the most important facets of the NEST scheme, and one that will chime with finance leaders, is that it is delivered with a high-quality approach. “Choosing a well-run scheme for an employer will ensure best possible compliance for them. It will give them confidence that what they are going to be delivering for their members will be robust.
“There will be strong governance measures in place, with a diverse trustee board in place that has great breadth and depth of pensions knowledge and experience, and a skills matrix, so they will be covering all bases,” says Dowsey.
Good governance is a key priority of the scheme. “At NEST the member is at the heart of absolutely everything we do, we will ensure, through research and analysis of the membership, that everything we deliver and every decision we make is in the best interests of the members,” she says.
FDs can be confident that the retirement provision for the workers in their organisation is being well run. Equally importantly, they can be assured that they don’t have to worry about the scheme and can concentrate on their day to day responsibilities.