Auto-enrollment has led to over 7 million employees being enrolled in workplace pensions by March 2017. Compliance among employers has been improving but is still an area of focus, with nearly half of employers missing their staging deadlines in early 2017. Opt-out rates have remained low at under 10%. Looking ahead, ensuring compliance among the estimated 200,000 new employers each year will be a priority in the near future. Longer term, the adequacy of contribution levels and relieving pressure on the state pension are issues that may be examined. Employers are also increasingly focused on effective pension governance to mitigate risks and maximize returns and benefits for employees.

1. “The past-present and
future of auto-enrolment”
In 40 minutes!

2. The past
• By the end of March 2017, 503,000 employers had enrolled 7.7m
employees.
• Triple defaulting applies; people are
• Defaulted into auto-enrolment
• Defaulted in at the employer’s contribution rate
• Defaulted into an investment fund.
• NEST had been used by 368,000 employers
• It has nearly 3m active members
• Nearly 5m people have used NEST
• NEST has become the default pension provider for Auto-Enrolment

3. The present
Auto-enrolment is now at peak staging capacity
Non-compliance is high and higher than in previous years
Of employers staging in the first quarter of 2017, nearly half (46%) signed up either very close to or
after their staging date deadline had past
One in four firms (25%) actually missed the deadline, up from less than one in five (18%) in Q3 2016.
Source NOW pensions.
Opt-outs remain low – under 10% - consistent with previous years
This is nowhere near the car-crash that had been predicted. Why?
• Increased efficiency of payroll processing
• Higher levels of awareness among SMEs (Government campaigns appear to have worked)
• Accountants have stepped into breach left by IFAs and Employee Benefit Consultants

4. The immediate future is about
compliance
The initial staging period will be complete by March 2018
Up to 200,000 new employers per annum expected to stage from March 2018

5. The future; what of the
auto-enrolment review?
SCOPE
• Self-employed
• Auto-enrolment thresholds
• Off payroll workers – definition of personal service workers
• No automated mechanism
• Little awareness among employers/business advisers
• “More honoured in the abuse”
DEPTH
• Timing of phased contributions
• Longer term considerations – adequacy as a state top-up
• Relieving pressure on state pension (triple lock)
• Capacity and appetite of providers for minimum contributions

6. Pension Schemes Act (2017)
Impact
Qualifying Master Trusts will merge
Few new master trusts come to market
Master trusts will find profitability harder
IFAs will further withdraw from workplace pensions
Legacy occupational pension schemes will be replaced by master trusts or
GPPs

7. The longer term future is about pensions
• NEST currently owes DWP £539m
• debt will peak in 2026 at £1.2 bn
• breaks even in 2038
• Estimated assets by 2038 £500bn
Workplace pensions become
extremely profitable 2020+
Employers move from compliance to
governance
What role will accountants assume

8. Payroll dashboards – how pension information
will be delivered….
Through payroll And through pension dashboards

9. Why employers need workplace pension governance
Risk mitigation
• Regulatory COMPLIANCE
• Pensions are DEFERRED
PAY
• Pensions are PRIVATE
WEALTH
• Perceived negligence by
an employer can have
serious consequences
Return on employer’s
investment
• MAXIMISING
perceived employee
benefit
• MINIMISING cost to
employer
• INCREASING
employee
engagement
Enlightened Self-
interest
• Good governance can
improve returns on
pensions by as much
as 1% pa.
• That would mean
bigger pensions for
everyone in the
organisation.

10. The risk of offering a workplace pension
• COMPLIANCE the workplace pension must qualify and stay qualified
• DEFERRED PAY contributions increase 2% - 4% -8% of band earnings
• STAFF WEALTH workplace pensions enjoy visibility and ownership
• EMPLOYER LIABILITY – duty of care?
The fiduciary obligations of employers have yet to be tested, but
workplace benefits carry reputational, commercial and regulatory risk

11. Employers wish to maximise the benefit of pensions as “reward”
• Positive goodwill generated from demonstrable governance
• Promotion of scheme good for retention/morale/productivity/recruitment
• Maximising return on contributions both for workforce and shareholder
• Increases employer contributions
• A modest investment in governance can generate high return on investment
ROI = Return on Investment
At Sage Summit 2017 , 150 employers were asked whether they felt they
had a duty of care over pensions – every single employer agreed they did.

12. Enlightened Self interest
A 1% pa improvement in return means a
pension that’s 27% bigger
at retirement

13. • Rate my
pension
service
• Action plan
with a variety
of options
• Performance
benchmarking
using Vfm tool
• Bespoke
Governance
report
Benchmark
Consider
options
Execute
Document
Employers need an effective due-diligence process

14. Document with a
Governance report
A standard report that brings
together relevant material from a
variety of sources
• Feedback from employers
• Feedback from members
• Feedback from payroll
software and managers
• IGC reports

15. Engaging providers through their IGCs
2016 2017
Provider+2017 reviewEffective? Engaged VFM Link to reports Effective? Engaged? VFM
Insurers
Royal London http://tinyurl.com/mrthsaq
Prudential http://tinyurl.com/koaoo5k
Legal & General http://tinyurl.com/lccnpke
Scottish Widows http://tinyurl.com/k83quv9
Aviva http://tinyurl.com/n7rr6v6
Friends Life http://tinyurl.com/n7rr6v6 Now Aviva
Aegon http://tinyurl.com/mgsfok2
Zurich Assurance http://tinyurl.com/k7fcc3q
Standard Life http://tinyurl.com/n69wfbv
Asset Managers
Fidelity http://tinyurl.com/mawd4gu
BlackRock http://tinyurl.com/mgdx47y
Legacy providers
Old Mutual http://tinyurl.com/lbxunoz
Abbey Life http://tinyurl.com/nxclr75
ReAssure http://tinyurl.com/lcwfnvp
Virgin Money http://tinyurl.com/nx48ksc
Phoenix http://tinyurl.com/ldjc7ov
New breed SIPPs
HL Vantage http://tinyurl.com/n4hyzdj
True Potential http://tinyurl.com/kfq778c unpublished
Intelligent Money Unpublished unplublishedpublished
IGCs are our eyes and ears
They act for members
Increasing value
Driving down cost
We monitor IGCs
We measure if they are effective
…if they are engaging
…if they measure value for money
We blog our research
Providing IGCs with feedback
Engaging employers and members
Holding feet to the fire

16. IGCs are deciding we’re getting value for
money
Employer
experience
Member
experience
Retirement
outcome
+ +
Of course we are!

17. Numbers are fictional 1yr perf % 3yr perf % Risk taken out (zero is par score) Slippage (bps) Quoted fund cost Value for Money score
L&G 10 8 + 0.3 6 13 92
NEST 13 9 +0.5 8 12 90
Aviva 11 7 - 5 16 87
Peoples Pension 10 9 - 0.2 7 10 87
Now Pension 8 5 +0.4 8 21 78
Standard Life 9 8 - 14 32 77
Quality data – enables employers to analyse
“value for money” and benchmark their plan
Over
time
Return
Volatility
of
returns
Risk
• Quoted
+
• Hidden
Cost
Value
for
money

18. Engaging your staff with their
workplace pension
• Employers complete rating of their workplace pension
• Employees complete rating of their experience of their workplace
pension
• Responses displayed against default ratings (created by
employer+member +payroll research)
• Workplace pension rating report created for employers and
employees.
• Report contains Red/Amber/Green (RAG) ratings for further action

19. Take-aways
• The past has been a success – we had significant resources
• The present is going fine – we are prepared (with a few exceptions
• We’ll take the future in our stride – raising our game again
• The future will be less about compliance and more about pensions
• We do not expect to see IFAs returning to the workplace shortly
• Will employers demand/need a pension governance service?
• Are accountants prepared or willing to provide it?