Recent articles confirming ATP’s attempt to launch a NEST comparative scheme led me to wonder what Federer, Djokovic or our own Andy Murray had to offer workplace pension reform……
On closer inspection (googling “ATP” and ignoring any tennis references) I was led first of all to a promising website called All Tomorrow’s Parties promoting concerts, and other hip cultural events featuring the likes of Portishead and Mogwai, but sadly, with nothing much to say about pensions. Further investigation (adding “pension” to my “ATP” google search) led to the Danish national pension agency, which made a little more sense.
I must admit when I think of Denmark it brings to mind bacon, the little mermaid, the eponymous pastries and more bacon. Which probably says more about me than it does about Denmark. The Danish ATP (or Arbejdsmarkedet Tillaegspension, as they say in Denmark) runs one of Europe’s largest pension schemes. In 2009 ATP pulled out of the running to provide administration services to what were then described as personal accounts. At the time PADA suggested that providing such services did not fit with ATP’s commercial model. Two years later things have clearly changed.
The announcement that ATP was launching a UK pension offering to take advantage of auto-enrolment through its multi-employer trust NOW Pensions brought two conflicting thoughts to my head, the first being that any competition surely benefits members. Competing companies will work hard to deliver on cost, ease of use and member choice. A company with a monopoly will perhaps simply adhere to the bare minimums of the agreement made.
The second thought that meandered through my cerebellum wondered if introducing competition at a crucial stage of an already confusing process was really what was required?
Large trust based multi employer occupational schemes with guaranteed low charge levels need member volumes to survive. It has been suggested that 2 million members will be required to make NEST viable in the longer term.
I am not 100% comfortable with any monopoly (outside the board game) but I do wonder if NEST should at least be allowed some breathing space post 2012 before being joined in this sector? One would hope the agreements made in the procurement process and the principle of charging levels in the workplace reform would ensure the members receive a simple product delivering value for money.
Having said that the Danish model (no making up your own jokes at this point, please) comes with an excellent track record in its homeland, and ATP has clearly been doing its homework since the appointment of Nigel Waterston last year and, more recently, Christopher Daykin the former Government actuary. It is clearly a credible product. However, if this leads to a raft of further “Auto Enrolment Solutions” I would hate to see another workplace pension initiative fall flat, with large sprawling Trust schemes failing to attract sustainable participation.
Two schemes or not two schemes: that is the question: as a fabled Prince of Denmark once said.