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Darren Philp: Why pensions minister doesn’t need to push the auto-enrol panic button

Darren Philp, the People's Pension

There has been much talk in recent weeks about the auto-enrolment timetable and whether providers can cope with the ever increasing numbers of employers staging from January next year.

This has even led to, admittedly, misguided calls from some areas to delay the roll out of auto-enrolment. Let’s put this all in context.

Yes, the staging profile from January 2016 is a challenge. The first three months of next year alone will see around 110,000 employers subject to the new auto-enrolment duties.

So far only around three per cent of companies have staged over the three years to October 2015. And we now face the challenge of cramming the remaining 97 per cent into the next two and a bit years.

Readers of Money Marketing will be aware that The People’s Pension announced a new streamlined and full support proposition on 5 November. This is aimed at helping smaller employers meet their auto-enrolment duties.

To ensure that we could deliver the highest level of support (something that small employers and their advisers told us they needed), we also announced that this would be accompanied by a one-off employer charge (£300 for those coming via an intermediary, £500 for those coming direct) that would come into effect from 23 November.

The gap between the announcement and the charge coming into effect has provided a useful test of our capacity at The People’s Pension. We expected there to be high volumes with advisers, quite understandably, wanting to clear their outstanding backlog of clients before the charge came into effect.

Our expectations were more than met. Over that two week period we signed up over 7,200 employers at an average of 426 per day. On our busiest day we signed up nearly 1,200 employers.

To put this into context, in the month before the announcement we were signing up, on average, 59 employers per day. So we dealt with a seven-fold increase in volumes. Volumes won’t ever get much higher than this, even during the busiest staging months.

It was by no means easy. But what this period did do was provide a robust test of our systems and operational plans to meet the challenges of the market from January onwards, something we’ve been busy working on for the past year.

We pride ourselves on our service standards at The People’s Pension and call wait times did go up. Actually they went up from an average of 4 seconds, to 10 seconds.

And on occasions it took us an hour to send out an acceptance pack rather than a few seconds. Not bad when you consider that over 1,000 employers a day were signing up, that’s nearly one a minute. No real need for panic.

As the pensions minister has recently said, the Government has created a market for pension providers with the introduction of auto-enrolment. There are a number of big (and some newer, smaller) providers who are gearing up to cope with the coming challenge.

So the capacity is there. It will be tough and systems and call centres will be pushed to the limit. But our experience over the past few weeks is that this can be done and, importantly, done well.

There is no need for the minister to press the panic button anytime soon.

Darren Philp is director of policy and market engagement at The People’s Pension



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