What’s the current situation?

This document explains the key features and benefits of the Choose a Pension (CAP) quotation and comparison tool. www.pensionplaypen.com provides small compa­nies and their professional connections - accountants and financial advisers - with the workplace pension for their staff.

Much of current focus has been on the complying with auto-enrolment regulations. We think this is likely watching the supporting act and missing the main attraction!

Auto-enrolment administration is important but it’s the workplace pension which is what the 10m new employees are really interested in.

If we fail to help employers to access workplace pensions , auto-enrolment will become simply 'red-tape’ and one of the great social experiments of the past fifteen years will be jeopardised.

This is why the online service provided by Pension PlayPen is so important, not just to employers and financial advisers but to the on-going reputation of auto-enrolment and indeed workplace pensions.

There are two distinct views of auto-enrolment scheme selection and most employers will be split.

On one side will be those who see auto-enrolment as part of the reward strategy, about good pension outcomes and about improving the culture and reputation of the employer.

On the other side will be those who see auto-enrolment as the cost of contributions and of making processes compliant to meet “employer duties”.

www.pensionplaypen.com looks at the pension decision from both sides and allows companies to take a balanced decision on what best suits the employer and the eligible staff.

Advisory practices should be urging their clients and firms to take advice as we move closer to the spikes in demand in 2014.

How www.pensionplaypen.com can help

We are Britain's first and only online selection tool for workplace pensions. Being an online service, there is no manual intervention. This keeps costs to a minimum. It costs an employer nothing to use our "choose a pension" (CAP) service. The only cost ,which is optional , purchases a 40 page report documenting the decision taken and providing an actuarial certificate.

Within CAP are a number of modellers which will allow you and your client to assess the workforce, model contribution costs and decide on the contribution strategy for staff. CAP also provides a handy converter which will model the real cost of the NEST and NOW charging structures according to staff age and turnover.

The tool itself replicates the selection process employed by First Actuarial and other major actuarial consultancies to choose a workplace pension provider. The initial screens comprise a fact find that captures key metrics of the employer such as staff turnover, the numbers and payroll for eligibles, entitled and non-entitled jobholders. The fact find also enquires over the numbers of staff can be reached by e-mail and the attitude of the company to online contribution processing.

The data captured is shared anonymously with up to 20 providers (providers such as Pesnsions Trust and Social Housing Pension Scheme will only quote for schemes in spe­cific industries). The Providers will either accept on automatic terms or on underwritten terms or decline to quote.

Once the quote process is completed (generally in real time), then you and your client can review your options. For each provider there is a fact sheet which provides factual details as well as value judgements from First Actuarial. First Actuarial rate each provider on six metrics (price, service,durability, at retirement options,member engagement and quality of the investment proposition).

Each of these metrics is scored 1-5 by First Actuarial. First Actuarial also provides weight­ings against each metric which you can use or adjust according to your client's prefer­ences. A combination of weightings and ratings creates what is called a "balanced scorecard" and ultimately gives a score out of 100 against each provider. Your client has a clear "league table" of front-runners from which a selection can be made.

Once a decision on the future provider has been taken, the client can choose to have an audit trail and an actuarial certificate delivered online and in real time. Job done.

Why you should be using CAP

The risks of getting the advisory decision wrong cannot be underestimated. PI policies may or may not include this work, but even where an adviser is permitted to advise on workplace pensions, the duty of care to the client needs to be of a high order and the documentation of the decision both detailed and credible.

Few advisers have the time to thoroughly research workplace pension providers. First Actuarial devote considerable resource to the research process meeting all providers at least once a year and the majority on a quarterly basis. The analytics that inform CAP and the rating mechanism are the intellectual property of First Actuarial and you and your clients will benefit from the rigour of its process.

For Networks

The service appeals to networks as it applies a standard process which will produce consistent results across a wide range of clients. Where the primary relationship with a corporate client is through a key executive or for another line of business, this simple process of choosing a pension which should command no more than two hours of an adviser's time is a valuable addition to a network adviser's toolkit.

Typically we would expect a network to adopt the CAP process as its standard means of selecting a pension. In such cases, it may be possible to leverage some economies of scale where the likely purchase of reports is likely to be high.

For Independent Firms

We anticipate that most independent Advisers will see financial opportunities from dealing with corporates in almost every area other than the provision of the workplace pension itself. Whether those opportunities are with staff ,with the Employer or with its Executive and or Owners, a satisfactory solution to the problem of selecting a workplace pension reinforces existing relationships and opens doors to new opportunities.

Ten Top Tips for getting the most out of CAP

1. Rubbish in/rubbish out; the more accurate the data you feed into CAP, the easier for providers to underwrite and the less likelihood for post take-on disputes
2. Use real time payroll information when doing your workplace assessment - your employer will thank you for accurate data on which to model contributions
3. Your input into likely opt-out rates and take up from non-eligibles will be valuable to the employer in deciding on the contribution rate
4. You can help your client with the balanced scorecard by discussing their weightings
5. In particular you can help your client assess their need for service support on auto-enrolment issues- especially if you are helping with the interfaces if you are operating middleware
6. You are best placed to advise on intricacies such as the integration of legacy pension arrangements
7. You have an important role to play explaining salary sacrifice and how it works
8. Once the client has made a decision, your input is important to ensure that full documentation on the decision is downloaded
9. You may be able to offer help with the chosen provider through your existing broker consultant
10. It is one thing to make a decision, another to implement, your input into the establishment of the new scheme and the auto-enrolment processes to go with it , will be of immediate value.