Top five auto-enrolment myths - busted
We can all agree – auto-enrolment’s been a great success. More than 7 million working people have now been auto-enrolled, with pensions set up and a brighter financial future to look forward to.
And with more than half a million employers set to stage in 2017, the opportunity for accountants is a unique one.
Despite this rosy picture, there are still some perennial myths to bust. So here’s a sample of what Standard Life typically hears from employers, along with some myth-busting answers, to help you reassure your SME clients.
Myth 1 – big insurers aren’t interested in auto-enrolment
That’s an easy one to start with. Standard Life, one of the biggest Pensions and Savings businesses in the UK, has helped employers enrol over 1.2 million employees – and that’s more than 1 in 6 of all auto-enrolled employees.
And we’re not planning on resting on our laurels any time soon. We’ll continue to invest heavily in making auto-enrolment quick and easy for employers and a great experience for employees, supporting you and your clients through the whole journey.
Myth 2 – auto-enrolment is hard to do
I take the point - like all new things, there is definitely a learning curve to be negotiated with auto-enrolment. But the truth is, a well-designed and well-run pension scheme needn’t be hard work for the employer; it can and should shoulder much of the compliance burden as part of the service. It could even be considered an asset rather than a liability, and free up time for employers to get on with their day job.
Myth 3 – auto-enrolment is expensive
Cost-conscious accountants will know that just like a car, or a holiday, a workplace pension scheme is a classic example of getting what you pay for. Not all pension schemes are the same and one size most definitely does not fit all.
Your SME clients could be looking for a skeleton solution at the lowest possible cost, or aiming to offer a valuable employee benefit that could make a material difference to attracting and retaining staff. Or something in between. So when you’re assessing costs, remember your client’s scheme choice should be based on how much importance they place on value for money, reliability, quality and trust.
Myth 4 – employees are forced to join an auto-enrolment scheme
Actually, they are if they are eligible - but once enrolled, they can opt out whenever they want to. However, studies show that financial wellness leads to a happier, more productive workforce. So it does make sense for employers to encourage auto-enrolment with enthusiasm.
At Standard Life, our opt out rate is less than 6%, and it’s something that the partnership of a good employer and a good scheme can really help with, by delivering the right communications throughout the retirement journey, and gently nudging employees into making positive decisions for their financial futures.
Myth 5 – all workplace pensions are the same
In fact, the choice is vast and again, it depends on what kind of experience each individual employer client wants for their employees. There are numerous choices around things like how many funds a provider might offer (from under 10 to more than 1,000); the restrictions involved – for example, limiting contributions and where money can be invested; the different levels of administration support offered, and options around good employee education and engagement support.
So in conclusion, it’s vital that your SME clients know their own business goals and ambitions, and can use that knowledge to decide what kind of experience and retirement solution they want to offer their workforce. The sky really is the limit when it comes to auto-enrolment – and that’s no myth.
Standard Life PLC are a pioneer in the workplace pensions market and are proud of leading the industry with meaningful innovations. We are global business that manages, administers and advises on investments for our customers and clients.
This blog is one of a series of articles from our commercial partners.
The views expressed are those of the author and not necessarily those of ICAS.