Auto-enrolment: the magical answer to Britain’s pensions or time to consider alternatives?
AE has been with us for quite some time now and by the end of this year, all companies will have reached their staging date. For many it's been the first real wake up call to be better prepared for life after work, or to ensure adequate provision is in place for their employees. But with no planned changes to policy or raising of contribution rates coming in this year, some out there will be starting to question whether their current scheme is fit for purpose, for them or those who work for them.
Let’s pull right back and look at AE from the perspective of a question, specifically Auto Enrolment’s own (little) big bang; why Auto Enrolment? In the same way that the world needed punk to save us from the Bay City Rollers, Occupational Pensions needed AE to save us from Stakeholder.
If any government of the day is capable of recognising that most people have not made sufficient provision for themselves in retirement, it ought to be able to have the foresight to see where a policy of freedom for employers and employees to opt in or out of work place pensions was going to get everyone. So essentially, the thing wrong with the Stakeholder concept was that employees could say thanks, but no thanks. And they did, in great numbers.
AE, as we all know, is just Stakeholder reloaded (just like most SIPPs are now merely Personal Pensions reloaded). That’s fair enough, the wheel did not need to be reinvented, just made a bit rounder. By setting minimum percentages of contributions for both Employer and Employee and making ‘opt out’ much trickier for, shall we say, slightly less ethical employers, legislation should serve to protect people from poor employment packages but also their own ill-advised short term thinking.
This all looks robust enough but come on, when is anything that’s designed to serve the masses fit for the individual? That’s the question that needs to occupy the minds of employers who might welcome an altogether smarter way to fulfil auto enrolment requirements whilst simultaneously accessing something considerably more interesting for their employees as well as adding value to their business.
If you are a business owner that’s already staged, or is soon to do so, or a Professional Adviser who helps business owners and entrepreneurs, now is a very good time to task us with proving that PSG can make the very best of what can sometimes look like a limited set of choices.
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