Written by
Will Tear

Published
02 Mar 2016

Pensions: is there a skill shortage?

02 Mar 2016 • by Will Tear

Growth in pension awareness

The Financial Times reported last month that for 2016 the Pensions Regulator (TPR) is about to enter their busiest period with over 110,000 employers being processed on to auto-enrolment. It’s the turn of small businesses, but even if you compare it to the 3,400 medium sized employers processed at the same time last financial year, this is a huge uplift. 

As a market, auto-enrolment has driven the need for pensions advisory services and we have seen a huge increase in consulting positions due to the need of firms to have a regulated pensions scheme in place before the end of this financial year.

Pension revamps causing vacancies

However, we are seeing an increase in vacancies across a number of different service lines, which can also be attributed to the government “revamping” pensions legislation. Aegon recently reported from a survey of 250 life & pensions providers that 61% of respondents cited pensions freedoms as the top issue they had been dealing with, closely followed by investment planning at 44%.

Willis Towers Watson also recently released a report on how defined contribution pensions assets now represent nearly half institutional pensions assets. This shift to DC pensions schemes has seen real growth in the past 10 years, growing at a rate of 7.1% per annum compared to 3.4% for DB schemes.

Pensions skillsets need to develop

The pensions market is a in a real growth stage and we have seen huge increase in demand for consulting based roles across all aspects of pensions advice, especially within DC & investment consulting. However, we are also seeing the need for internal experts to manage pension operations on behalf of organisations. With closed DB pension schemes now listed on the balance sheet, firms have to be mindful of the debt as it is closely linked to the financial performance of the organisation. In March last year, it was publicised how Tesco was changing it’s DB pension scheme to a DC one. While reporting the worst financial results in its history, it was also announced that its pensions deficit had grown from £2.6bn to £3.9bn in the space of a year. With Tesco committing to paying back £270 million a year to recoup the deficit, the company was not the popular choice for investors it once was.

This growth is not showing any decline and with even more changes to legislation predicted to come, is the increased workload going to be manageable? In the UK, skill shortages are regularly talked about across different sectors such as IT, construction etc. However not yet within pensions… 

Based on the increased number of employers entering auto-enrolment this year alone, it can be correlated to a huge increase in demand for services. And speaking with specialists across the market, they are only expecting further growth; 

So will there be skilled labour available to cover the demand? 

Talent planning is key within any industry but based on current predictions for the pensions market, it is becoming essential for firms to handle the situation with forethought. The next twelve months will be an interesting time in the pensions space, but with this expanding industry, I wonder if this is a skill shortage waiting to happen.