“Too often governments make short-term decisions for expediency. We need a long–term regime for financial savings,” says Anthony Filbin, managing director of workplace savings at Legal & General.
Filbin – who has seen his fair share of governments come and go since he joined Legal & General in 1979 – is no shrinking violet. Legal & General is responsible for the pensions of more than 4,000 different UK companies, but it is those without any sort of pension at all that concern Filbin most. “People have some stark choices,” he says. “There are five or six million people not saving for retirement. It’s likely they will have to carry on working for much longer than they originally planned, and that forces all sorts of issues.”
Finding out about those problems has become his personal passion. “I make sure I go to workplace forums where our own people are doing staff presentations, listening to issues that affect real people,” he says. “I even look at every complaint we receive. Some of those aren’t really complaints – they are questions, such as why a fund value has gone down, or why people can’t get their money at 35. It’s often about misunderstandings. It makes me understand that we need to find out how to address those in our own communications.”
Effective communication, believes Filbin, also has an important role to play in the workplace. “Education is everything; it helps create a better outcome for all – the employee gets a better outcome, and the employer sees significant benefits for its spend,” he adds.
In terms of demand for benefits themselves, Filbin says he is seeing auto-enrolment create a knock-on effect. “Among larger companies, we see employers want broader benefits, but there is also an imperative to get auto-enrolment right first. The focus on that has meant some other initiatives have been put on the back burner.” He argues these other benefits initiatives should not be forgotten.
The good news for mid-sized companies is that Filbin believes the work larger employers are putting into addressing auto-enrolment and other benefits could provide a template for smaller organisations.
“I hope that in five years’ time, we will see more mid-sized employers plugged into platforms with a wider range of modules, tools and information on where to invest,” he says. “These don’t have to be financial products only, but could include other elements, such as discount vouchers.”
Legal and General is involved with half of the companies required to auto-enrol their staff during 2012. Filbin is therefore in the frontline when it comes to solving the main challenges employers face. “Once the nuts and bolts of understanding who to enrol and how are in place, there’s been a lot of focus around employee engagement,” he says. “Explaining how we would address that formed a big part of the interviews we had before being appointed by firms.”
He argues being able to understand employees goes hand-in-hand with understanding what employers want too. “We’ve seen different views as to whether employers want auto-enrolment to be a success,” he says. “Some grasp the social inclusion issues and want as many people as possible to take it up. Others want to minimise cost.”
So does that affect the type of communications advice Legal & General devises for clients? “We’ll explain the range of opportunities on offer, but what is taken up is driven by them,” he answers. “Knowing that more than five million savers will be coming to pensions for the first time has meant making our messaging more penetrable, but within the confines of the regulations. We’ve been doing everything from coffee stirrers and napkins, though to QR codes and video posters in the workplace.”
Because auto-enrolment is such a watershed for pensions, Filbin argues that in some quarters, it has driven innovative approaches to savings: “From a design point of view, master trusts have struck a chord. A lot of employers are used to trust-based arrangements and it’s a very suitable route.
“We’ve also seen much more interest around default funds. NEST (the government–sponsored pension scheme), brought about innovation in the way it has built its default fund, and also around the way it has approached its communications. I expect to see much more innovation around the default fund in the future as well.”
Pensions’ current position in the spotlight has had the knock-on effect of forcing some murkier corners of industry practice to be cleaned up, says Filbin. “One of the biggest challenges facing pensions providers has been around charges,” he says.
“There have been recent initiatives from the government – such as those around small pots [small amounts of money that employees accumulate during a short stay with a company pension scheme], and this focus is important. We’ve seen practices from some providers in the past where someone’s pension charges double overnight just because they’ve left the company. We’ll continue to see more moves to stamp those out.”