Do you see fundamental problems in the introduction of corporate wraps into the workplace?
Steve Herbert, head of benefits strategy, Origen
YES. Whilst the whole concept of corporate wraps is a good one, and nhas appeal to both employees and employers, I am concerned that ou industry may be focusing on this as an solution to the issues that we currently face, such as the RDR and personal accounts, rather than focusing on the end user at outset.
There are several obstacles to be overcome, the first of which is autoenrolment. Employers will need to avoid accusations of ‘soft-coercion’, and this could be tricky within a wrap where shorter term saving vehicles are key. One solution will be to set a core level of pension contribution, equivalent to that proposed for personal accounts.
Given that many employees do not understand the fundamentals of savings, the interaction and tax treatment of the Wrap elements may be far too confusing for many. To ignore this issue may be inviting potential mis-selling issues in the future, which is something the industry must avoid. All the elements of an excellent product are there, but the industry needs to give this a little more thought before we deliver the finished article.
Michael Whitfield, chief executive, Thomsons Online Benefits
YES. Corporate wrap is nothing more than an extension of a benefits offering, whether it is single sign-on, in specie transfers or corporate Isa. But the flogging of insurance products in the workplace will not be the saviour of the providers. We have seen that come and go in the past withmortgage payment and redundancy insurers – employers will simply not allow insurers to come into their workforces and sell insurance products.
I understand fully the economies of scale benefits of having a corporate buyer doing volume for corporate Isas, but I do not see insurers selling products through the workplace. You only have to look at the voluntary benefits market. How much money does that make? Not much.
As to coercion, we know there is a thin line between coercion and advice but we have done a good job of frightening people into not giving advice on pensions, and I think the same will hold true for other products that are introduced.
I am amazed that the provider industry has been persuaded to invest so many millions in this just because someone came over from New Zealand, a tiny country, and told them it would work.
Robert Reid, director, Syndaxi Financial Planning
YES. None of the providers have recognised that the real challenge is how they are going to engage members of the public with all this functionality. We in the industry think they are all the greatest thing since sliced bread, but I am not sure that the British public are that interested in aggregation tools.
Yes there is potential in corporate wrap, but what if you get some nutter shoving all their cash into Outer Mongolian futures? Do you as an employer have a duty to stop them. Or, do you put in place a core strategy? If so, are you liable if that turns out to be wrong.?
If you look at the US, it has become a big issue and they have given it a lot more attention because the employer is liable. As a result employers are a lot more engaged.
Over here the regulator is flitting around the issue.
Corporate wrap is a good idea, but providers need to ask themselves whether it is going to level to considerably increased levels of business. If not, it is a lot of money to spend.