This research, by master trust provider Welplan Pensions, revealed a fluid auto-enrolment landscape, with small and medium sized businesses looking to change their pension provider if returns were poorer than expected, or charges too high.
In a survey of 500 SMEs, Welplan found that 54 per cent had already switched their AE provider since their original staging date. This trend was particularly pronounced in medium sized businesses, where 66 per cent had switched, and the construction (67 per cent), business services (70 per cent) and IT (65 per cent) sectors.
A total of 49 per cent of SMEs planned to switch in future, with 20 per cent planning this change within the next six months, before employer and employee contributions increase.
This survey was conducted among decisions makes – such as managing director or heads of finance at these SMEs. For those saying they planned to switch AE provider, it asked about the main reasons for this change.
The main driver is value for money, cited by 40 per cent of SMEs. Investment performance was cited by 35 per cent of respondents with 31 per cent looking for a scheme provider that offered easier transactions.
A further 31 per cent cited investment choice and 30 per cent said they would switch for better customer service.
For those who did not plan to switch (38 per cent of respondents), seven out of 10 said they were happy with their current provider, and around a quarter (24 per cent) had not thought about it, or were unaware of this option.
Welplan Pensions chief executive Bruce Kirton says: “Business owners want value for money. It’s the main reason why there is such a high level of switching.
“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.”
Welplan has been operating since 1960, initially in the engineering services industry. It now offers a range of pension and benefit solutions to both small and large employers across a full range of sectors.
