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This is an important question. I’ll explain in a few minutes.
First, what can you do in 6 minutes?
Fry an egg (sunny side up)
Run a mile (if you’re fit)
Swim 300 metres (if you’re very fit)
Eat 6 crackers (without water)
Go to the loo (includes washing hands)
Run a bath (assuming average water pouring rate and depth)
Drive 6 miles at 60mph (not in a built up area)
Make a pumpkin pie (not sure about that one, seems ambitious)
Call my mum (good luck with that, I’ve never managed under 20)
So why is this important?
I reckon 6 minutes is the time available for the industry to set up each of the c30,000 pension schemes we need to put in place for employers next summer.
The maths:Number of schemes30,000Number of days (1 Apr – 1 Aug)123Number of minutes (1 Apr – 1 Aug)180,000
= 6 mins per scheme
Why does that matter?
Our run rate over the past 20 years or so for setting up schemes was one every 3 hours.
But surely there are some variables to consider here?
There are.
In the really early days, most employer schemes were established using paper applications and there was no straight through processing.
Going forward, things will be more streamlined, more will be done online. This should speed things up.
Previously, schemes were on average larger, they were set up by choice, usually with the resources of an in-house pension team or HR department. Next summer schemes will be smaller. But employers won’t have the same resources; probably not an HR department of any significance and certainly not a pensions team. And most will be establishing schemes to comply, rather than by choice. They will need support. This could slow things down.
My point is, all things being equal, we – providers and advisers – need to up our metabolic rate by a factor of around 30. Is automation the only way, or have you found other ways to boost the metabolism of your business?
And by the way, 6 minutes doesn’t allow any time for leisure or sleep. Never mind calling my mum, which could upset the whole auto-enrolment schedule…