I have always thought of pensions as being like grapes; it is sensible and far more efficient to distribute them in bunches. I welcomed the automatic-enrolment reforms for just that reason. The distribution of personal pensions one at a time to individuals was a costly way of getting millions of people to save for the future.
The new pension reforms will eventually ensure almost every workplace in the UK will provide its workers with a company pension scheme. This reform was long overdue, but will soon be a reality.
The initial level of contributions required by the legislation is very low, but over time will increase to reasonable levels. I would hope future developments will further increase the amount of workplace pension saving through increasing the level of contributions required or changing the earnings bands to which auto-enrolment applies. It is quite likely a combination of both will be adopted during the 2020s and beyond and thereby boost the value of lifetime pension saving for the whole population.
The proliferation of workplace pension schemes may yet have many other beneficial consequences that are only now becoming apparent. The vast majority of employers who have never before provided a pension scheme for their employees are becoming more empowered by being involved in helping their employees accrue private pension assets.
I doubt responsible employers will stop at simply providing pensions for their staff as things develop, however. The ease with which a whole range of benefits can be brought to employees through the workplace and the ease with which they in turn can interact with such services through smart technology makes employers the most likely agents of change in the spread of financial inclusion in the future.
With half the current population having less than £100 in savings and many having ever-mounting debts to credit cards and store cards weighing down on them, it is high time some kind of breakthrough is made on the depressing issue of financial capability.
Employers can play a far more effective role in that than the financial services industry can.
Our industry in the UK seems too insular to reach out to the millions of citizens who could really benefit from being provided with the information and means to get their financial affairs in order. Employers, however, have a vested interest in the wellbeing of their employees and can help enormously.
We will see over the coming decade a quiet revolution taking place in businesses up and down the country, with even the smallest employers involved in making financial planning tools and services available through the workplace.
The so-called advice gap that so many in the financial services industry point to as a failure of Government policy may yet be dealt a death blow; not by the ivory tower- dwelling experts in finance, but by responsible employers in everyday businesses using smart technology to spread financial capability in the workplace.
The auto-enrolment reforms will one day be seen as having been the catalyst for that revolution.
Steve Bee is director at Jargonfree Benefits