Column: Steve Bee

Everyone in our industry knows that, of course, and has done for some time now; these reforms have been on the statute book for four years already. But knowing about the reforms is one thing, understanding them and the effect they will have on the UK pensions landscape is quite another. I wonder if many of us really appreciate the fundamental changes that are about to happen? The corporate pensions market, for example, that the readers of Pensions Week know and love so well; what exactly is about to happen to that? Well, for a start the number of workplace pension schemes we have is about to mushroom from just a couple of hundred thousand or so to 1.3 million. Everyone in the industry knows that, the big 1.3 million number is quoted in all good pension conventions and seminars these days and the number litters the many learned articles appearing in the pensions press. It’s a number guaranteed to get audiences nodding. But the make-up of that big number is not well understood yet I think. All employers are soon to be affected by the new rules and the need to comply with them; large employers and small employers alike. To be fair, large employers don’t have too much to worry about. Most of them already run pension schemes for their employees, or at least some of them and a tweak or two here and there will probably do as far as compliance with the new pension duties are concerned. Large employers are also likely to employ professionally qualified HR staff who’ve got exams in the complexities of pension provision. They are also most able to employ the professional help that exists in the thriving pensions consultancy industry. But what of the smaller employers? The SME firms, the small employers (defined as having fewer than 50 employees) and the so-called micro-employers (those defined as having fewer than 10 employees)? The big 1.3 million number includes 173,405 small employers and 968,545 micro-employers. What? Yes, you heard that right most of the employers in this country are running small or very small businesses. Will those firms be well serviced by the existing professional pensions consultancy industry? They’ll need more support with all this than the larger employers will as it’s highly unlikely many of them will have professionally-qualified HR directors sitting on their boards; most of them won’t even have boards, to be fair. Sooner or later I think those who write about ‘corporate’ pensions and those who work in something they call ‘corporate’ pensions will have to wake up to the fact that they actually only write about or work in a tiny subset of the real corporate pensions market in the UK. My hero, Bob Dylan, once famously said “It used to be like that, now it’s like this...” when describing what he’d done to something called popular music. Very soon I think we’ll be saying something similar about our corporate pensions market as it gets shaken out of its cosy past and thrown into the realities of its more inclusive and challenging future...