12 days of Christmas

With just a few weeks to go until Christmas, we’re probably already in danger of getting ‘Christmas fatigue’. But if, like me, you’re a bit of a pension’s geek and don’t want to get pensions withdrawal just for fun why not try adding a pensions twist to the traditional ‘12 days of Christmas’ looking back at the world of pensions in 2015. Here’s my take on it.

One goal; making sure auto enrolment is a success
Since the start of auto enrolment, we’ve all been preparing for the high volume of small and micros that’ll stage. Earlier this year we learnt there’ll be an extra 500,000 of them. Now more than ever we need to keep our eyes on the prize – making sure we all play our part in helping a new generation save for their retirement.

Two (and a half) million members of NEST
2015 saw NEST enrol its two millionth member; by the end of the year that number has already grown to over2.5 million. NEST is doing what it was set up to do alongside the private sector and we’re continuing to develop our tools and services to meet the needs of demands of the next employers to stage.

Three years of auto enrolment 
We’re now three years into auto enrolment. It’s fair to say the industry has learned a lot. This is good news for the 1.8 million small and micro employers starting to stage. Most have previously never had to deal with pensions at all. For example, our research shows that eighty four per cent of employers yet to stage don’t currently have an active scheme in place. But help is at hand – we’ve developed tools to help make auto enrolment straightforward.

Four (thousand NEST connectors)
It’s been over a year since we launched NEST Connect, the free online hub for professionals helping employers with auto enrolment. Last month the total number of NEST Connectors reached 4000. Many smaller employers are looking for intermediaries to help them with auto enrolment and it seems that the intermediary community are tuned in to the opportunity that technology, like NEST Connect, presents.

Over five million people saving through auto enrolment
This year the sector reached 5 million workers auto enrolled into a pension scheme, from a standing start in 2012. There’s still 5 million to come. With our research showing 33 per cent of people view their workplace pension pot as their main source of income in retirement, this is hugely encouraging.

Celebrating six NEST awards over the past year
Christmas isn’t the only time to receive gifts. We’re delighted to have won six awards this year including Multi-employer DC Provider of the Year (Pension and Investment Providers Awards, 2015), Chief Investment Officer’s Best DC fund (European Innovation Awards, 2015) and Pension Scheme of the Year (Financial News, 2015). This is just one of the ways NEST is being recognised as a quality scheme in the auto enrolment market.

Pensions: from seventh place to third
Pensions are becoming a national priority. When asked how people would prioritise spending if they had more money, pensions have risen from seventh place in 2011 to third in our most recent NEST insight report.

Eight per cent opt out rate for NEST
So far NEST’s opt out rate is steady at 8 per cent on average. That number is even lower for young workers; just 5 per cent for those aged 22 to 29 years old. It’s really encouraging that so many people are choosing to stay with NEST and save for their retirement.

Nine web service functionalities (i.e. set-up)
Earlier this year NEST revealed new web services functionality revolutionising the way that payroll and pension software integrates. NEST has developed a system that allows data to flow seamlessly from payroll to NEST. There are nine functions payroll developers can choose to build to, from setting up a new employer to approving payments.

Less than ten per cent opt out across the sector
While NEST has an opt out rate 8 per cent, it’s also only around 10 per cent for the sector as a whole. Before auto enrolment was implemented many people expected an opt out rate of 35 per cent. NEST research has also found that the number of workers who previously opted out but now plan to stay enrolled has reached a new high of 41 per cent.

Eleven per cent of small employers who know a lot about AE
2016 sees an increasing number of small employers stage. Keeping our eyes on the auto enrolment prize means understanding who they are and how they act. Our research found just 11 per cent of smaller employers know a lot about auto enrolment. It’s stats like this that can help all of us develop tools and approaches which ensure enrolment is as smooth and straightforward as possible.

Twelve NEST Trustees
This year Otto Thoresen joined our trustee board as chair, becoming the twelfth member of the board. The board is just one way we ensure good governance at NEST. This year we published our master trust assurance report (AAF 02/07). Governance is crucial to build confidence in pensions; it’s this confidence which people need to realise tomorrow is worth saving for, next year and beyond.

Paul
first published in PMI News