The fallout from the race to meet auto-enrolment deadlines has been revealed by the latest research.
More than half of small businesses have switched auto-enrolment provider in a bid to secure better value for money.
And just under half (49%) are set to follow suit, with a fifth planning the move in the next six months in the run up to combined employer and employee contributions increasing to 8% of the employee’s salary.
Clifton Wealth’s auto-enrolment expert Peter Harvey said: “In my experience, the majority of employers were simply concerned with compliance in the run up to staging. Now that a number of these employers have lived with their qualifying scheme, it is apparent that a number of employers are seeking a potential better deal in terms of both employer and employee costs.
“We have already dealt with a number of employers who have seen a reduction in their charges and a better member experience after moving their qualifying scheme to another provider.”
The duty for employers to provide a workplace pension, in a bid to boost the UK’s retirement saving, was rolled out in 2012 with employers given a staging date, effectively a deadline, to comply.
Currently minimum employer contributions are 2% with the employee contributing 3%. From April 2019 those levels will rise to 3% for employers and 5% for employees.
Welplan Pensions spoke to 500 senior decision-makers, including small business managing directors and heads of finance.
Value for money was given as the main reason by around 40% of those planning to switch with a further 35% suggesting they were looking for improved investment performance.
Quality of communication for members was behind the planned move by 29% of those questioned. However, 38% said they had no plans to change providers with one in four of those unaware of the option to switch.
Peter said: “The statutory communications are, of course, a crucial part of meeting auto-enrolment compliance and a number of providers either don’t provide this service or charge extra.
“All employers should have a robust scheme governance process which should include reviewing the default investment strategy on an at least annual basis and this is something that would identify if there were failings and allow amendments to be made if required.
“Clifton will undertake a formal review of your existing arrangements for free to better understand how well your existing scheme is meeting its duties and if it remains fit for purpose.”
Peter Harvey DipFA,
Senior Adviser, Clifton Wealth,