Analysis: NOW:Pensions: How ATP’s UK workplace scheme got beset with problems

Danish labour market pension giant ATP entered the UK market in 2012 with ballyhoo about the ‘Vikings are coming’ to challenge the country’s pensions industry with a “simple” and low cost offering called NOW: Pensions as the government introduced workplace pensions auto-enrolment.

At the outset executives said responsible investment would be at the core of the offering, with now departed CEO Morten Nilsson telling RI back in 2012: “We have to be a responsible investor and we have to think about whether the assets we invest in are governed correctly and meet ethical standards – because there’s an investment risk if they’re not.”

But six years on the multi-employer trust finds itself beset by administrative failings, without a permanent CEO after Nilsson’s departure and having to pay out tens of thousands in fines.

It’s a crisis that has ensnared some leading figures across the pensions landscape.

How did this happen, especially as NOW: Pensions is backed by such a respected owner and leading responsible investor? The firm is wholly owned by ATP and its assets are managed out of Denmark.

At launch, NOW: Pensions had a blue-chip board, including ATP’s then CEO Lars Rohde – who has gone on to lead the Danish central bank – and former trade union leader John Monks.

Its current Trustee Board, which oversees decisions on investment strategy, pension administration, and overall risk framework, includes politician Nigel Waterson (chair) and former Government Actuary Chris Daykin. Joanne Segars, the former head of the UK’s Pensions and Lifetime Savings Association (PLSA) and chair of trade body PensionsEurope, is also on the board.

Its commercial board is headed by former top Danske Bank and Danica executive Henrik Ramlau-Hansen, the current chair of Danish financial supervisor Finanstilsynet.

However, “persistent administrative failings” at the company have led the Pensions Regulator (TPR) to lose patience and set a deadline of April for it to fix its “long running” issues.

When it launched, NOW: Pensions pledged to “make it easy for employers to implement auto-enrolment through easy technical integration”.

But failings at the scheme have resulted in some employee and employer contributions not being “collected and invested promptly”, between April 2015 – August 2017.

NOW: Pensions was initially fined £50,000 (€56,356) in November 2017 but in January 2018 it was fined again, this time £20,000 for not keeping members properly informed about the issues at the scheme.

Nicola Parish, TPR’s Executive Director of Frontline Regulation, said: “We will continue to monitor progress and will issue further fines if necessary.”

TPR has also issued two formal notices against the scheme over its failings: An Improvement Notice, issued when “a pension scheme’s trustees or managers are in breach of obligations under pension law”, and a Third Party Notice, issued when “any third party whose actions contribute to (but do not themselves constitute) a breach of pensions law”.Members have had to take their problems to the Pensions Ombudsman, an independent body that resolves disputes.

One upheld complaint last year centred on pay being deducted without being paid into a plan. The Ombudsman criticised NOW: Pensions’ “unresponsiveness”. In the end the member had to get her Member of Parliament (MP) involved to help force a response from the company.

The scheme was ordered to rectify its error and pay compensation within 21 days of £500 for the “distress and inconvenience” suffered. Failure to do so would have landed NOW: Pensions in county court, the judgment said.

It all led to NOW: Pensions – which competes against the likes of government-backed NEST and the People’s Pension – having to withdraw from the TPR’s master trust assurance list of providers for auto enrolment in July 2017.

A month after this, founding CEO Nilsson – a former senior ATP executive – was replaced on an interim basis by finance chief Troy Clutterbuck after the board decided it was the “right time to make this change in executive management”.

Independent trustee firm Dalraida was brought in October to help sort things out.

Speaking to RI, Waterson, a former pensions spokesperrson for the governing Conservative Party, attributed the start of the problems to the trustees’ 2014 decision to move third-party administration from Equiniti Paymaster to Jardine Lloyd Thompson (JLT), saying the trustees had “underestimated the complexities” of the move.

Waterson conceded that the scheme had taken “too long to sort out the issues” but was confident that the regulator’s deadline of April would be met.

He told RI that the issues were caused by bad data from employers. He said: “The service we have given to some of our employers has fallen short but I would just make the point – without seeking to blame the employers – that these problems only arise, or only have arisen, when there has been bad data.”

According to Waterson, NOW: Pensions’ new in-house system, Gateway – which it has been developing over the last two years at a cost of £4m – will prevent any bad data getting into the system in the future.

For the time being, clients are declining to comment – although one, Durham University, has confirmed to RI that it is no longer a member of the scheme despite appearing on the NOW: Pensions website.

NOW: Pensions serves over 1.6m workers and 31,000 companies, but it lost £14.3m in 2015 and £16.6m in 2016, according to filings at Companies House, though Waterson says it broke even last year.

A spokesperson for ATP said NOW: Pensions and its management team has its “full support”.

“ATP are fully aware of these issues and confident that NOW: Pensions are working alongside The Pensions Regulator to meet the deadlines as per their announcement.”