Coming up with solutions.

Do small pension pots matter?

We are looking at customers who have saved small amounts of money into a pension pot , that is, from £10 to £100's. In these cases the money is in effect ‘frozen’ into a pension scheme and can’t go anywhere for the benefit of the customer in the short term.

These funds are also inefficient for pension fund providers to service and we are convinced  could be put to good use by the customers in tighter economic times.

We are currently working through a number of options to understand if it’s feasible to provide our customers with alternative forms of access to these funds.

How is auto enrolment going?

We were one of the pioneers of auto enrollment work in the UK, working with UK Government to encourage systematic pension saving.

As one of the major providers of pensions we are pleased to say that our Workplace Savings business has auto enrolled over a quarter of a million new members into company pension schemes by the beginning of March 2013. And, expect new joiner numbers to be significantly ahead of previous expectations.

Many of the companies that chose us for their auto enrolment process – including Marks & Spencer, ASDA Stores, The Co-operative Group and Alliance Boots amongst others – had staging dates that started last year. For many of these pension schemes the initial ‘AE window’ is now closed.

Early results indicate that opt out rates are less than 10% overall. This is well below the figure of 33%, suggested our consumer surveys (1) and the Department. for Work and Pensions expectations published last year (2). Pre AE research among eligible employees (3) indicated that the 50s to 60s age group said they would be more likely to ‘opt out’.

Tony Filbin, Managing Director Workplace Savings (photo)

“We set out to deliver a straight forward, effective AE process and the early results show this is working well.

We are delighted to have delivered so many successful new pension scheme members in such a short time. Many of our clients are large employers who were the first to reach their AE staging date.

Over 90% of eligible staff in the schemes that have completed staging chose to remain in their company pension, a solid endorsement of the quality of the schemes offered.

As our research predicted, those in the 30 to 40 age group are showing the lowest number of members who opt out from their first premium with over 50s returning the highest opt out rate.

These early results mean we will be administering thousands more new company pension scheme members over coming months than first thought. Our Workplace Savings business is set to more than treble in size by the end of the AE staging programme, following our significant investment in straight through processing and online tools, and is well positioned to deal with this.”

Tony Filbin, Managing Director, Workplace Savings


(1) – Research was conducted on behalf of Legal & General by JointheDots between 11 and 27 July 2011. It involved 107 respondents (106 with an employee pension) from the Legal & General consumer online panel. Each respondent was shown a description of auto enrolment explaining timescales, who is eligible and required contribution levels before being asked about whether they would opt out.

(2) – The Times, 20 September 2012: “Steve Webb, the Minister for Pensions, estimated that only one in three employees affected would opt out and forecast that 7.5 million employees out of the 11 million targeted would be nudged into workplace pension saving.”

(3) – Research was conducted by NMG across the UK between 12 and 25 May 2011. It involved focus groups across the country with employees from a range of firms with between 50 to 500 empoyees. Each interview lasted 75 to 90 minutes plus each respondent was required to complete a paper questionnaire.


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