Standard Life has today launched a report making six key recommendations to industry and policy makers to help ensure a positive experience and outcome for those who are automatically enrolled into defined contribution (DC) workplace pension schemes.
‘Now we're nudging' follows on from last year's 'Keep on nudging' report and examines how the industry can use the Pension Regulator's six principles framework to ensure that DC workplace pension schemes deliver good outcomes for members. The report recommends:
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Appropriate contribution decisions: The pensions industry, its regulators and commentators, should prioritise and remain focused on creating a positive perception of saving and increasing the number of pension savers through auto-enrolment, then look at how to encourage people to save more than the initial statutory 8% rate.
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Appropriate investment decisions: Providers, advisers and trustees should help employers review scheme default funds to ensure they are still fit for purpose before they start auto-enrolment, and ensure there is a review process in place thereafter.
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Effective and efficient administration: Providers and regulators should use customer insight to conduct a grass roots review of key regulatory communications to ensure they are genuinely useful and easy to understand.
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Protection of assets: Providers should highlight where significant risks are borne by members and take action to ensure these risks are minimised.
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Value for money: The industry must deliver on its commitment to provide clear and meaningful information to employees on pension charges and investment transaction costs, and the potential returns.
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Appropriate decumulation decisions: Providers should review the communications provided to people in the lead up to retirement, to ensure they are being given the support they need to make the right decisions.
Jamie Jenkins, Head of Workplace Strategy, Standard Life said: "Auto-enrolment provides the UK with an unprecedented opportunity to build a savings culture and help people to save and feel more confident about their future. The success of auto-enrolment will not just be measured by the number of people who stay enrolled in their workplace pension scheme, it will ultimately be measured by the results that are delivered for them at retirement.
"Over the past couple of years the industry has worked with the Pensions Regulator to develop a consensus on the six key ‘enablers' to delivering good member outcomes. We fully support these enablers, but believe that more needs to be done to ensure that they genuinely work for people in practice."
‘Now we're nudging' sets out how the industry can work in partnership with policy makers, regulators, employers and employees to ensure that scheme members get a better experience across the six core areas.
Jenkins added: "We are already working with our clients and their advisers to review default fund options in advance of staging dates to ensure they are appropriate for auto-enrolees. In addition, we have moved to close access to some external fund links which we do not feel are suitable as default options for auto-enrolees.
"We are committed to looking at a number of other initiatives to support good member outcomes and we believe that our six recommendations, if acted on appropriately, will help ensure that workplace pensions evolve for the benefit of employees."
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