Palmer's Pensions: Countdown to more fireworks…

Six weeks from now will be a time for bonfires and sparklers, but it will also mark the end of the DWP’s ‘blink and you miss out’ consultation period on its latest set of regulations to implement the 2008 pensions act.

The Act itself, which introduces automatic enrolment and mandatory employer contributions into workplace pension schemes from 2012, should -in theory- be heralded as a new beginning bringing pensions to the masses and encouraging more people to save more for their retirement. But what started out as a well intended reform is now being jeopardised by the latest round of regulations.

One of my big bugbears is around auto enrolment. The regulations state that large employers will have automatic enrolment imposed on them before medium, small and micro employers.

Now I'm not the first to state how much of a good thing auto enrolment is, but have we really, honestly and truly thought about what this will mean for the very savers we are trying to engage? Do we have a well thought out plan for how these people who, having been automatically popped into a pension scheme, will be able to manage the said pension longer term?

One of the biggest challenges facing our industry is how to tackle the ever-present apathy among investors when it comes to saving for the future. So-called member engagement tools (designed to help those in corporate pension schemes better understand their finances and manage their pensions online) work best when implemented and supported as part of an ongoing programme.

Arguably the DWP could already have a cunning plan (which it has yet to share with everyone) for engaging the automatically enrolled masses post 2012. But I suspect the more likely scenario is that at some stage further consultation will be invited on this - ideally over a longer period than six weeks.

Either way, it is vital the DWP properly focuses the mind so that we don't end up with a Personal Accounts product that fails to adequately address member engagement issues just because the DWP it is too focussed on developing and delivering a low cost product.

With increased longevity, lower longer-term investment returns and a state pension that has reduced in real terms value over many years, many people have an even greater need to focus on how they will fund their retirement. Now, more than ever, the DWP needs to strongly consider how the new proposed regulations will cater for ongoing employee education and engagement.

At a time when, across the board, the support and tools available to existing scheme members has never been better, it would be a terrific shame to lose this momentum. Instead, it would be far wiser to build on what is already in place and learn from all the knowledge we have already garnered. After all, the very people auto enrolment is intended for are the ones who will need the most assistance to help them go some way towards achieving any retirement goals they might have.

So my parting shot, ahead of all the fun and fireworks to come, is a word of caution to the good people at the DWP- let's think about what happens post enrolment and even better, let's give ourselves longer than 42 days to do it!

Martin Palmer is head of corporate pensions marketing at Friends Provident.