Ian McKenna, director of F&TRC, introduces this year’s survey
“The sector is packed with opportunities for advisers over the next few years and the ratings covered in these pages are designed to help advisers select which pension providers to recommend”
With the corporate market increasingly looking like the channel for distributing financial products to the mass market, our new-look 2012 Group Pensions e-Excellence ratings are designed to give advisers a series of valuable measures by which to judge the increasingly diverse range of propositions offered by different pension providers and identify those that are best aligned to meet the needs of employers of different shapes and sizes.
Whatever Pensions Minister Steve Webb may think, the reality is that The Pensions Regulator has delivered a set of rules that will mean few businesses will be able to meet their auto-enrolment responsibilities without some form of professional help. In practice this delivers a wealth of opportunities to the adviser market, not only to support employers directly but also to partner with accountants and other professional advisers, to help employers avoid the inevitable hailstorm of fines.
Conveniently Nest has structured itself in such a way that it will not have the ability to facilitate adviser charging, so in practice any employer not willing to incur a direct charge for such support will need to include other pension providers either in part or exclusively. Personally I believe Nest has made a strategic mistake with this approach as it will lead to employers only selecting Nest for those employees who are most expensive to administer, while choosing to make different arrangements for those members who are likely to accrue a more cost-effective level of savings.
Nest’s mistake creates a golden opportunity for other pension providers to essentially cherry pick the best business while Nest bears the cost of the uneconomic individuals. This will also enable employers to provide better benefits to their most valuable employees. In essence the sector is packed with opportunities for advisers over the next few years and the ratings covered in these pages are designed to help advisers select which pension providers to recommend.
There appears little doubt that the extent of support advisers and pension providers are able to provide in meeting auto-enrolment obligations is likely to be the key driver when employers decide who to work with. Some providers are already coming to market with their technology offerings to support employers autoenrolment propositions. Having looked at a few of these offerings it is going to be really important to have a clear understanding of the functionality such systems bring with them. In compiling these ratings and looking at some of what has come to market so far I have been building up a fairly detailed list of what good does and does not look like. It will be really important for advisers to clearly understand the capabilities and shortcomings of individual insurers’ employer duties support.
Once an employer has adopted a particular pensions provider’s system it may be difficult to move to another provider without the potential loss of crucial information such as when opt outs need to be re-auto enrolled. When assessing such support it will be essential to identify what data a pension provider will supply back to the employer should they choose to switch provider in the future. Equally this may in fact make a case for the adviser to adopt their own stand-alone employer duties support technology.
Historically our ratings have produced a single overall measure of the quality of provider’s e-commerce propositions. In recent years different pension providers have increasingly produced very diverse propositions targeting different sectors of the market. Consequently we have evolved the process so that we are now delivering an individual measurement and rating on each area of the pension provider’s proposition, resulting in a far more granular analysis that can be used in detail as part of the provider selection process.
By identifying and measuring no fewer than 76 different elements of DC pension providers’ service offerings this study is designed to support the process of the adviser agreeing with the employer those services, content and functions that are most important to the client and then identifying which pension providers, based on the ratings, have the best offering in the areas that have been agreed as the client priorities. We hope advisers will find these valuable measures to support their wider advice process.
Further information on the detailed results of the survey including the individual results table for the GPP, CIMP and Group SIPP surveys can be found at: www.ftrc.co/benchmarking/eexcellence/group-/ group-pensions-results/