Middleware not essential for Nest – Taylor

Middleware is not essential for automatic enrolment into Nest and the scheme did not build its own because there is no market failure in that field, says the provider.

Speaking at an event co-hosted with IFA search site Unbiased.co.uk, Nest managing director of customers and propositions John Taylor said the challenge of setting up Nest to accept all comers meant it could not focus on middleware as well.

Unbiased.co.uk chief executive Karen Barrett said a quarter of enquiries it receives are related to auto-enrolment, while the CII reported that two thirds of its advisers are either already engaged in advising on auto-enrolment or planning to do so. But the majority of those who are not getting involved are doing so because of confusion over how auto-enrolment implementation will work says by CII director of insurance and financial Services Steve Jenkins.

Delegates at the event said referral relationships with accountants are the key way to secure leads for auto-enrolment.

Advisers also complained they were being obstructed in planning ahead by commercial providers who would not discuss terms for schemes more than six months away.

Taylor said: “We made a very conscious choice not to go into middleware for two reasons. Firstly, Nest’s remit was to provide a pension scheme that is open to any employer to use. We had our hands full setting up a pension scheme with the capacity to deal with unprecedented volumes and we wanted to make sure we did a really great job. We were set up to deal with a market failure in workplace pension provision for workers not in a current scheme. There isn’t a market failure in terms of middleware.

“Secondly, there are risks attached to exporting and importing data to and from third parties, particularly when timescales are tight and the pay fluctuates. As with any pension scheme, employers need to make sure their data is accurate, up-to-date and in a format that can plug-in to whichever schemes they use, regardless of any software they may wish to use to help them manage automatic enrolment processes.

“Many employers are working with their payroll providers to do that. Of course, if employers want to use a third party or third party software to help them manage automatic enrolment processes, Nest will provide information to enable that third party to work seamlessly with us. However, middleware isn’t essential in terms of how employers use Nest.” 

Ridgeways financial adviser David Mills said: “Some providers have said that unless the client is six months away they won’t look at it, whereas the advice we are giving and the advice everyone else is giving is that you should be reviewing this at least 12 months before. So does that not take these providers entirely out of the proposition? We have to then discount them because the employers need certainty that something will be in place.

“As far as ongoing services provided, we don’t have any middleware software and we aren’t part of a network. At present we are providing scheme set-up only, which means setting up the scheme, putting it in place and giving the employer the information that they need in order to run it. We don’t charge on an ongoing basis or have anything in place for ongoing services.”

Barrett said: “Accountants are the gateways into automatic enrolment and adviser referrals. We have spoken to ICAEW and ACCA to help them understand the implications for their members. It is about educating accountants en masse because I believe they are a very important group.”