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The Secondary Auto Enrolment Market

The ‘primary market’ for auto enrolment started in 2012 when AE was first introduced and adopted by large businesses. Over the course of the next six years, businesses of all sizes were given staging dates – the date by which they needed to have a workplace pension on offer to their employees.

October 2012 marked the start of the government’s flagship auto-enrolment policy, designed to reverse the decline in pension saving. Six years on, almost 10 million employees have been auto-enrolled into a workplace pension scheme.

Employers were staged into auto-enrolment over almost 5 years, with the UK’s largest employers going first. Those employees fortunate enough to have been auto-enrolled from the beginning might have saved in a workplace pension for six years now.

Kate Smith, Head of Pensions at Aegon, said: “Six years on, auto-enrolment is delivering on its objective with more people saving into a workplace pensions than ever. Pension saving is fast becoming the social norm and auto-enrolment has been the catalyst for many to start saving for their financial future. What our figures show is that for those who have been saving since the outset of auto-enrolment, around two thirds of the value of the pension comes from employer contributions, tax relief or investment growth, highlighting the value of the scheme over simply putting more in cash savings.”

That process ended in early 2018 as all existing businesses had been through the process. Now, any new company setting up has up to six weeks from when they take on their first employee to get their AE scheme in place.

Many SMEs have now had their schemes for a number of years, providing them with time to assess if it is delivering what they require. This has led to a ‘secondary market’ where businesses are looking to potentially change their AE pension provider. This secondary market is being fuelled by those companies and their advisers who are now looking around to see what else is available.

Malcolm Goodwin, Head of Workplace Savings & Retirement at Aviva, said: “When AE was first introduced some businesses will have viewed it as a hassle - something to just get done and out of the way. But since then, some of those businesses will have seen major expansion or may have changed their view on the importance of workplace benefits.

“Whatever the reason, we are seeing a major increase in the number of enquiries from businesses and their advisers who are realising they have the freedom to switch if they aren’t happy with their current provider.


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