The industry has given a mixed response to the Pensions Regulator’s decision not to publish a list of auto-enrolment schemes available to smaller employers, with some suggesting it could do more.
The watchdog issued a consultation on the matter in November last yearseeking feedback on whether the move could help address the risk of non-compliance among small and micro employers.
However, despite receiving some support, it said on Thursday that challenges remained over setting the entry criteria “fairly and evenly” across all schemes and “difficulty in articulating criteria for universal acceptance of all employers, regardless of size”.
Gary Smith, head of defined contribution consulting at Capita Employee Benefits, said the wider DC governance standards being introduced in April should negate the need to steer employers towards “approved” schemes.
He added: “Secondly, just because a scheme will not accept all employers or all of an employers’ workforce, does not make it a bad scheme. In fact, tailoring a product to a particular profile of individual could arguably make it better as it will be designed to meet their needs much more directly than a one-size-fits-all solution.”
Perhaps the regulator can do a little more to steer employers away from this line of thinking without going down the route of publishing a list
Clare Abrahams, Aon Employee Benefits
Clare Abrahams, head of auto-enrolment at Aon Employee Benefits, said it was the right decision for the regulator as such a move could encourage employers to be lax about fully reviewing their options.
But Abrahams added it could do more to avoid inadvertently privileging Nest over other schemes.
“These are the same employers who are selecting Nest – despite the restrictions and disadvantages – because they feel that this is the ‘safest’ route for compliance," she said.
“As such, perhaps the regulator can do a little more to steer employers away from this line of thinking without going down the route of publishing a list.”
The National Association of Pension Funds was supportive of the proposal to create a list, said Richard Wilson, policy lead for DC. “Although we did raise some concerns in maintaining such a list,” he added.
Wilson also said small and micro employers who wanted to ensure staff have access to quality pension provision should look for schemes with its Pension Quality Mark Ready award, given to schemes that offer high governance standards, low charges and clear member communications.
