Talking Head: The pensions industry is gearing up for the large numbers of small employers about to stage – 1.8m employers need to meet their auto-enrolment duties in the next few years.
The National Audit Office recently suggested this would increase pressure on Nest. That is true, but we’re ready to play our role alongside the rest of the industry because we were built for scale from day one.
Although there are much bigger numbers to come, it’s worth pointing out that we’re already managing significant volumes.
It took 750 days to get the first 1,000 employers into Nest. Our most recent 1,000 took just six days. We could well see something like a peak arrival rate in the next two years of 1,000 employers joining in just two hours.
Careful planning
Since auto-enrolment began it was important to ensure we had the right capacity in our systems. The key was to develop systems that are scalable. We plan well in advance and performance testing is essential so we’re confident we can cope with future demand.
A recent test we conducted showed that our systems could comfortably cope with 3.5m members right now. Long before we expect to reach that stage, we will already be conducting tests on the next wave.
A recent test we conducted showed that our systems could comfortably cope with 3.5m members right now. Long before we expect to reach that stage, we will already be conducting tests on the next wave
It is careful planning like this that means we are more than just one step ahead of the numbers.
Looking to 2016 and beyond, despite the uncertainty about how many employers will choose Nest, we have reason to feel confident.
The experience of an initial group of around 4,000 small employers is particularly encouraging: although their larger cousins have more experience of pensions, smaller employers have simpler systems and fewer worker categories, so processing is much more straightforward.
Regardless, we’ve worked to create a system that can handle whatever numbers come to us. The reason is simple; Nest can’t turn the demand tap off. We’re the only scheme that has a legal obligation to accept any employer for auto-enrolment.
This obligation was put in place as a key part of the policy because the private sector acknowledged that there would be a certain section of the market that they would not be able to serve.
Our role has always been to ensure that all employers had a quality scheme available. So we have to be prepared for an unconstrained number of employers.
As a result our focus right now, as it has always been, is to fulfil the role set out for us. Alongside the rest of the sector, we are working hard to ensure we can meet the challenges of the next stage of auto-enrolment.
Together we can ensure that all of the 1.8m employers to come can stage quickly and effectively.
Nick Sex is executive director of change programmes and service management at Nest
