Ever since the ending of commission on workplace pensions with the implementation of the Retail Distribution Review in 2012, the so-called secondary market in workplace pensions, where employers switch schemes to a different provider, has been significantly subdued.
Complying with the complex new requirements of auto-enrolment has seen many employers approach their workplace pension as a regulatory obligation rather than a valued employee benefit, with priority given to the ease of use and seamlessness of interaction with payroll systems, ahead of other factors such as employee engagement and investment performance.
But some employers have experienced significant administrative problems with their providers, with contributions not collected and applied to members accounts properly. Six years into the rollout of auto-enrolment, other employers will now be reviewing whether the scheme they originally joined still meets their needs.
Switching activity will be tempered by the difficulty some employers will experience leaving certain providers which demand individual consents from members before switching.
The survey data shows that intermediaries now expect some employers to switch to a different provider, with three out of ten respondents expecting at least 10-20 per cent of the schemes they oversee changing provider within the next 12 months. 9 per cent of intermediaries see more than 20 per cent of schemes switching provider in the next year. A quarter of providers predict little or no movement of schemes at all.
