The corporate market is lumpy and the buying cycle for corporate benefits technology, including workplace savings platforms, is radically different from the retail or advised spaces.
Nonetheless, attitudes have hardened to corporate platforms. One major employee benefits consultant told us recently: “I am not sure we have written a single workplace savings platform scheme.”
There are four main reasons for the slow take-up of workplace savings platforms. First, auto-enrolment is crowding all thoughts of shiny new things out of the minds of benefits managers. We have heard time and again: “It looks good, but we need to get auto-enrolment sorted first and then we will revisit.”
Second, there is no financial reason for employers to offer individual savings accounts (Isas): they don’t offer the benefits of pension contributions, so there is no national insurance saving.
Third, there is no overwhelming demand from employees. As one benefits platform chief executive says: “Why would an employee sign up to an Isa and wait a month for it to start coming from payroll when they can do it immediately online with a debit card themselves?”
Finally, there is no compelling case from providers for employers to sign up to platforms. Too often, platforms are being sold as group personal pensions with knobs on. The market has not yet worked out exactly what to do with platforms; it needs more time.
But it’s not all bad. The numbers are moving and the experience of firms such as Hargreaves Lansdown and Fidelity shows that measures of engagement, such as the percentage of employees making active investment decisions in their pension, can be positively impacted with good communications and technology. The fundamentals are in place; we just have to be a little more patient.
Mark Polson is principal at The Lang Cat