Before anyone gets on their high horse and starts sending emails to the editor of this website (hold your virtual pen, disgusted of Tunbridge Wells), I would like to point out that the missing word in the headline above is “pension”.
No doubt, actual expletives were used down in the Department of Work and Pensions (DWP) when they heard that hotelier and former brewer Whitbread have decided that they will not be actively encouraging their 35,000-strong workforce to save via the auto-enrolment process. Whitbread will merely provide the scheme and leave it to the individuals themselves to decide whether to remain in the scheme or to invoke their opt-out clause.
It’s not because of the complexity that Whitbread are remaining neutral on the auto-enrolment process. Whitbread have a large workforce working in the hotel and restaurant business and are well used to handling complex payrolls where shifts vary on a weekly basis. Indeed, so non-standard is their staff that 23,500 do not have to be auto-enrolled anyway because they are either under 22, over the state pension age, or have a salary below the earnings threshold. It is clear that, unlike many smaller businesses, Whitbread would have no difficulty handling the administration side of the pension scheme.
No, what is making Whitbread stay their hand is the result of surveys they undertook, which showed that their employees were actually turned off saving by the involvement of their employer and found the whole idea of pensions frightening. The focus groups found that the employees switched off at attempts to communicate, not getting past page seven of a booklet written for a reading age of eleven, according to group pension’s director at Whitbread, Lesley Williams.
The reaction must have been bad, because Whitbread has now decided they will provide as little information as possible and, in their words they will ‘keep it as simple as we dare’. Of course, Whitbread is just one company. However, it is one that has a long history of providing employee benefits and they have put in work to try to bring their employees on board. And, like any sensible business, they have accepted the result of their focus groups and have decided to stop trying on the auto-enrolled pension’s front.
This just shows the extent of the problems facing the DWP in their efforts to nudge the nation into saving. If an employer the size of Whitbread is facing a reaction so bad that they are distancing themselves from the whole process, then there is obviously a major problem with the whole concept.
Without strong employer backing, it is likely that the opt-out rate is going to be much higher than the DWP originally anticipated. This would undermine the whole basis of the project and will mean that in future, those who have saved will move themselves out of the means-tested benefit range, while those who opt-out of taking care of themselves will still remain dependent upon the state.
We have to accept the reality that pensions are complex products and that most people do not like to plan that far into the future. If we really want to shift the burden of providing future incomes from the taxpayer and onto individuals, then the only fair way is to make everyone shoulder that risk by abolishing the opt-out and making pension saving compulsory. This is precisely what we will end up doing if more companies end up following Whitbread’s lead.
— Charlie Thomas (@pensionscharlie) February 28, 2012
— Ian Smith (@iankmsmith) February 28, 2012