It was as I was coming back to Brighton from my home in Somerset last weekend that it finally dawned on me.
This would be my last Sunday commute back to Brighton as an employee of TPR, a place I feel proud and passionate to have worked at for over 10 years.
To say TPR has changed since I started would be something of an understatement. When I first set foot in Trafalgar Place in 2005 as part of the team that would create TPR out of its predecessor organisation OPRA, there were around 200 members of staff – about a third of the people we still house in the same building complex today. After a short spell working elsewhere I returned to TPR in January 2008 to bring the Employer Compliance Regime team, who were then part of DWP, down to Brighton. Our remit? To set up and launch a programme that would give all employees access to a workplace pension. It would be called ‘automatic enrolment’.
There were six of us in a ground floor room at Napier House, faced with some enormous challenges. The first of these was to support DWP on what the legislation would actually look like. The fact that over half of the original team still work at TPR has been a real positive for the organisation, giving us a real understanding of the intricacies of AE law (I honestly believe there is nothing that Gillian McNamara does not know about workplace pensions and automatic enrolment), and a solid continuity of knowledge as the team has expanded.
The biggest challenge, once we had got our heads around the legislation, was how we were going to roll it out. We had many discussions with our stakeholders, NEST and the DWP, and were all in agreement that the implementation could not be a big bang with all employers going live at the same time…this was certainly going to be a disaster. We would need to introduce the changes in a controlled and measured way. But how? I believe that the staging approach which was ultimately adopted, starting with the largest employers and setting the tone, was the single most important decision we made – and, even in retrospect, the right one. Yes, it created a profile that looked like a mountain range to climb, but with careful planning and great care even the highest mountains can be climbed.
With change of the size of the AE programme there are always large risks, the biggest of which was how small employers would behave. Because of this unknown quantity, we insisted on the creation of a test group of employers – known as ‘pathfinder’, who we would monitor throughout the process to see how they fared and from which we could refine our approaches. It was from this learning that we developed our duties checker and five simple steps. This was hugely beneficial to employers. It was also hugely beneficial for the industry – the pension providers, advisers and payroll bureau all of whom could understand how employers would react to AE and then adapt their processes.
Subsequent employers have all benefited from this, and those employers in this test group also benefited from the huge attention that was placed on them.
The fundamental building block of AE is known as ‘nudge theory’, and we’ve worked hard with the government’s behavioural insights team to make it work for our programme. It doesn’t just involve harnessing inertia – although that is a key element of AE – it’s also about getting the tone and messaging right in our letters, so employers feel like they’re doing the right thing, and that everyone else is too.
I feel like we’ve achieved a lot in those nine years since the six of us sat together in a room, trying to work out how we could implement something of this scale. Over 7.5 million workers have now been automatically enrolled, and over 500,000 employers have met their legal duties. I feel I can say with confidence that we understand how small employers will behave and, with compliance rates consistently over 90%, automatic enrolment is well on its way to being business as usual in the UK.
Of course, it would be foolish to be complacent, and I know that despite the huge strides we’ve made, there’s always more to be done. We need to keep simplifying AE for employers as much as we can. But it’s important to celebrate success, and I am very proud of the work my team has done in making AE what it is.
From October this year, newly created employers will be starting their AE duties as soon as they take on their first worker. And we’ll start to see the minimum contribution rate increase, from its current 2% up to 5% in April 2018, and up to 8% in April 2019. Of course, the debate will continue as to whether 8% is enough. I suspect we’ll decide that it is not, and that we’ll need to increase the levels again in due course. But for now, the focus needs to be getting people up to 8% and persuading people that the increases mean their pensions will have real value when they retire.
I am really excited about my new role as the chief executive of the Money Advice Service, and am looking forward to the new challenges it will bring. But at the same time I feel very sad to be leaving TPR. I can truly say it’s a fantastic place to work, with a very dedicated and professional team who are committed to helping people have a more secure retirement. I will miss them hugely, and look forward to seeing the automatic enrolment journey continue in their safe and highly capable hands.
By Charles Counsell
Automatic Enrolment Executive Director