Fifth of AE market to switch in next year – research

The big switch

Over 2,000 mid- to large-sized employers intend to review workplace savings provider in the next twelve months equating to one-fifth of scheme members on the AE secondary market, according to research from Platforum.

The report says workplace savings providers are focused on the auto-enrolment (AE) secondary market for business growth. Having rolled out AE over the past three years, the research reveals that 30 per cent of medium and large employers intend to review their choice of provider in the next twelve months. This equates to 2,000 employers, representing one-fifth of scheme members enrolled in workplace savings platforms.

Aegon and Fidelity were the two providers with the highest proportion of assets outside default funds, both with between 60 and 70 per cent of assets in defaults. Hargreaves Lansdown has between 70 and 80 per cent of workplace assets in defaults, while Aviva, BlackRock, Royal London and Standard Life have between 80 and 90 per cent in defaults. L&G, Nest, Scottish Widows and Zurich all had more than 90 per cent in defaults.

The report found charges are the number one factor influencing EBC and corporate IFA fund selections, the first priority for 45 per cent of those polled, followed by past performance which scored 25 per cent and brand reputation on 18 per cent.

The wide-ranging report shows Aviva Friends Life is the largest workplace savings provider and Royal London is most highly rated by employers, EBCs and advisers.

Platforum found Aviva Friends Life is the largest workplace savings provider in the UK with an estimated £45bn AUA as at 30th June 2015. L&G and Standard Life follow with £43.3bn and £31.6bn respectively. These top three workplace savings providers account for just over half of AUA in workplace savings, among providers with at least 100,000 scheme members as at H2 2015.

Total workplace savings assets for providers with 100,000 + scheme members as at H2 2015

Provider Total Workplace Savings AUA
Aviva Friends Life £45bn**
Legal & General £43.3bn
Standard Life £31.6bn
Scottish Widows £28.4bn
Fidelity £22bn
Aegon £18.2bn
BlackRock £18bn*
Zurich £15bn**
Royal London £6.5bn
B&CE (includes The People’s Pension) £2.5bn
Hargreaves Lansdown £1.3bn
NEST £560m
NOW: Pensions £128m
Total £233bn

Source: Platforum, December 2015 *As at H1 2015
** Estimate

Royal London was rated the top workplace savings provider in Platforum’s survey of EBCs, advisers and employers. The firm was praised by advisers and employers for its processes and technology. Platforum’s report says Royal London has both eschewed the bells and whistles offered by other providers and has not pushed self-service as much as other providers. The firm got top marks for administration of AE.

Fidelity, Standard Life and L&G followed not far behind, with high marks for communication and financial education, integration with payroll, financial planning tools and integrated flex benefits tools.