New research has found that many UK small businesses have already moved to a new auto-enrolment pension provider in a search for better value for money.
These are the findings of a new survey conducted by Opinium for Welplan Pensions. Opinium polled 500 senior individuals at micro, small and medium-sized businesses with decision-making powers over their company's auto-enrolment (AE) pensions arrangements.
The results show that, rather than being trapped by inertia, smaller businesses view switching AE providers as normal practice. One in two SMEs (54%) have already switched provider since their original staging date and a further 49% intend to move in the future.
There has been significant movement among medium-sized businesses, where 66% have switched; and some sectors have seen more movement than others – notably construction (67%), business services (70%) and IT (65%).
Of those planning to switch provider in future, 20% say they'll make their move in the next six months, before employer's and employee pension contributions jump from 5% to 8% of salary. However, 38% have no plans to switch.
The researchers also studied the motives of those decision-makers who plan to switch. They found that:
- 40% cite value for money as a reason for switching;
- 35% cite investment performance;
- 34% mention ease of transactions;
- 31% are looking for the personal touch;
- 31% say it's about investment choice;
- 30% cite customer service;
- 29% are focussed on the quality of communication.
For those who do not plan to switch, most (70%) are happy with their provider and around a quarter (24%) have not thought about it or are unaware of the option.
"Business owners want value for money. It's the main reason why there is such a high level of switching," said Bruce Kirton, chief executive of Welplan Pensions.
"There has been huge focus by master trust providers on cost at the expense of value. This research blows that assumption out of the water: people also want good investment performance and robust systems that streamline administrative challenges.
"Smaller business owners are savvy and well-advised. They know what to look for in their auto-enrolment provider and how to get their needs met. Everyone in the pensions industry should now see switching as the norm. Employers want the best for their employees – and that's exactly how it should be."