Triggers are better than hard compulsion, says Stephen Ingledew, managing director, corporate, Standard Life
“I’m not a fan of compulsion,” says Stephen Ingledew, managing director, corporate, at Standard Life. “When we are told to do something, particularly by a government-led department, it’s a turnoff. My own experience is that when you engage people on their own terms, on their own ground, in their own language and in relation to their own lives, there’s much more enthusiasm.”
With auto-enrolment just around the corner, such a philosophy sounds like heresy coming from a senior figure at one of the biggest providers of occupational pensions in the UK. Indeed, when asked if auto-enrolment will be a success, Ingledew hesitates slightly.
“While I’m not a fan of compelling people to do things, after a couple of decades in benefits provision, I’ve realised that you do need triggers – you need prompts. Many employees get that prompt when they join a new employer, but the pensions industry has alienated so many people that they have not signed up – or pensions haven’t been available to them at all.”
Something, Ingledew concedes, has to break that cycle of mistrust to make pensions more appealing. “When auto-enrolled employees see pension pots building up over time, there will be more genuine interest. That’s the start of a positive cycle.” But it won’t happen overnight, he argues: “It’s not a five-year process. It’s a 10- or 20-year process.”
Similar to what our other Forces of Finance have said, before this process can even start, there is a job to do in communicating pensions more clearly.
“Very few individuals have really got their heads around it,” says Ingledew. “That’s why we are strongly encouraging employers not to wait until weeks or months beforehand, but to think in advance about how they will communicate auto-enrolment. If a firm’s staging date is 18 months away, it’s tempting to put it to one side. But I would instead, ask them what they think their business will look like by that staging date, what the implications will be in terms of cost and administration and any existing relationships, and how they are looking to develop the business as a whole.”
Standard Life’s first auto-enrolment client will be telecoms giant BT. In describing how it has addressed the needs of such a large, complex and high-profile client, he says: “It’s been about putting ourselves in the shoes of the employer and understanding what will keep them awake at night. We’ve also put ourselves in the shoes of the employee to understand how they will feel when they are auto-enrolled, asking what their journey will look like.”
One of the biggest challenges of auto-enrolment is getting the technology right behind the scenes, in terms of data, and Ingledew is convinced this connectivity issue will ripple into other areas of benefits. “The legislation gives employers a certain date by which to comply pensions-wise, but there’s a knock-on effect in terms of systems such as payroll, how you expect your workforce to be over a three-to-five year period, and what is of most interest benefits-wise to those people. The staging dates are forcing this to be addressed within a certain period of time. Until now it has been very easy to put off benefits reviews.”
Ingledew believes implementing full-scale reviews will also help to integrate pensions more closely with other types of benefits. “It’s a reflection of the changing profile of a workforce,” he says. “In the past, the approach would have been: ‘Here’s the pension, take it or leave it’. But when you have a more diverse workforce, employees need a degree of flexibility. Otherwise offerings won’t be valued.”
Helping employees understand the total value of their benefits package is a part of Ingledew’s vision to create a single, combined view of all workplace benefits and to make decisions based on that information. “For most people, the core elements will stay the same – such as saving for retirement, protection against illness – but other flexible benefits offer more choice.“
To fulfil this strategy, Ingledew talks about the idea of an employer benefits hub. “We’ll soon all stop talking about a pensions strategy or a flex benefits strategy and talk about a strategy for benefits as a whole,” he predicts. “It’ll be much more joined-up. The challenge is that most people are not interested in finance, find it confusing or don’t know where to go to find information they can trust.”
As such he says employers need to re-think how they view the benefits package: “Employers will have to increasingly recognise the value of there being an easy and convenient way for employees to get benefits that best suit their lifestyles.” He adds: “An employee who is taking care of their money is going to be more productive than someone who is on the phone all the time trying to sort out their finances. That person is more engaged and sees the employer as relating to their personal circumstances.”