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“I’m shaming employers into offering their staff a better deal”

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2 Mar 2018

Salvus Master Trust managing director Graham Peacock outlines his plans to expand the workplace pensions provider’s market share and shares his thoughts on AE.

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Salvus Master Trust managing director Graham Peacock outlines his plans to expand the workplace pensions provider’s market share and shares his thoughts on AE.

You mentioned opt-ins. Is that where you are going to expand your market share?

The main way we’re expanding is by challenging all of those employers that have already gone through this or had a workplace pension before automatic enrolment came along. They’ve continued with the same pension scheme, they’ve just thrown a few more people into that scheme because they have to. We’re shaking that tree and challenging that.

Opting-in? Yes, we’re trying to drive member engagement. We’re trying to drive confidence in the workplace pension. We’re trying to entice those that have the option to pay into it and we’re doing that in a number of ways.

Gone are the days, where you have a job for life and a gold-plated pension, as we used to call it. Well they’re a bit tarnished these days.

My daughter’s 29 and she’s got four workplace pension pots. What we’re seeing is lots of people that have lots of pension pots and they can’t see what their retirement is going to deliver. You see where this is going. Dashboard sounds great, but we didn’t wait for this to be delivered by the DWP, so we’ve built our own infrastructure for that where anybody who is an employee of a company that’s using Salvus as a workplace pension provider gets access to our retirement consolidation tool, where they can ask what it might be worth if they brought them all together.

We’ve plugged in Edinburgh-based Origo. They are a niche software provider that has cut the time down for pension transfers from 12 weeks onwards to 12 days.

You can’t be a pension provider without having Origo and expect to do anything with member engagement, and member engagement is now what this is all about. It’s a real challenge though, because I compare automatic enrolment and this term ‘member engagement’ to building a house.

Automatic enrolment was about digging foundations, deep, deep dark foundations and we are five years from getting out of the ground, because if you think about it, we’ve said to employees, “Last month, we put you in a pension scheme and we took some money off your salary, but don’t worry about it, it is okay.” It’s just a small amount, they’ve not noticed, they’ve not reacted or questioned. When it goes up in April 2019, where 5% will come out of pay packets, people will sit up and take notice, and that’s when we’re going to find out how close to the surface we are.

So we’re going to get negative engagement before we get positive engagement and we are doing everything we can now to make sure that as many people understand that 5% of their salary is being put aside for them into a pension scheme and it is probably the best 5% of salary they’ll ever spend. It’s not a tax, it’s not a deduction, it is still your money. It just appears on this balance sheet over here.

Log in and you can see it’s your name at the top, it’s yours, you can’t spend it today but that’s the whole point of saving. I don’t think we’ve scratched the surface on changing the savings culture in the UK. There is no revolution, we have automatic enrolment. Is it a success? I don’t know yet, we’ll get an indicator in May this year, when pension contributions triple for an individual, from 1% to 3%.

8% is what the government wants us all to be paying in. Rule of thumb, half of your age is the percentage of your salary that you should be putting into pension scheme.

Half of your age and you might have a fighting chance of a retirement. It’s a massive challenge. How do we get that message across to millions and millions of particularly younger people in the marketplace today, to say how important this actually is?

It’s by engagement but also it’s by doing it for them and pushing it as far as we can, until they say: “Hang on, what are you doing and why?” That’s when you’ve got engagement. It’s the one and only thing I agree with Steve Webb on. It’s called auto escalation. When we get to 8% in April next year, we intend to offer employers the option to escalate their contributions and their staffs’ contributions. We’re toying with what rates they should be, I would have said inflation but not sure that’s necessarily a reliable statistic, so we’ll probably say move it up by 0.5% a year.

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