When it comes to workplace pensions there’s a world of difference between a responsible employer and an employer who takes responsibility for excellent retirement outcomes for their staff. In our opinion it’s not just about complying with your mandatory Auto-Enrolment (AE) duties of:
- offering a compliant scheme.
- putting every eligible person into it and;
- making [at least] minimum contributions.
You also need to ensure you have the right provider, one that makes AE compliance as simple as possible while offering pension members genuine value for money.
The best way to achieve this is by reviewing the key components of a provider’s offering and selecting the one most suitable:
The Provider
Choose a provider that is authorised by the Financial Conduct Authority (FCA), financially stable, and committed to delivering workplace pension schemes. You should also have confidence that they can effectively manage investments and administration.
They should demonstrate a duty to treat customers fairly and maintain a robust Independent Governance Committee (IGC)
Costs
Pension providers usually charge members to manage their money. This is commonly known as the Annual Management Charge (AMC), which legally can be no higher than 0.75%* of the fund value annually.
The lower the charge, the more money remains with the member, therefore boosting pension values.
*to invest in the default investment fund
Investments
When a member joins a scheme, their contributions are typically invested in the provider’s default fund, which is typically decided by you. It’s therefore crucial to choose a fund that suits most members, considering its risk profile and expected retirement outcomes.
Performance matters - over 90% of members stay in the default fund. Reviewing historical performance against benchmarks and conducting ongoing peer comparisons can help you select the right option.
For members who self-select investments outside the default, ensuring a range of good-quality and varied alternatives exist is important too.
Proposition
Technology plays a key role in this - how members engage with their pension online is hugely important. Once logged in, what can they do?
Functional, easy-to-use apps and web platforms help members navigate what can be a complex, jargon-heavy savings vehicle.
Members should be able to view, interact, and act when they want—checking fund values, updating personal details, transferring old pensions, completing expression of wishes forms, and switching funds should all be simple.
Another area for consideration is the pension provider’s additional benefits. This could be access to short- and medium-term savings accounts, financial education hubs, calculators, insurance products and retail discount portals.
Finally, when members reach retirement age, how does the provider support them?
Communication
Equally important, clear, easy-to-understand documentation, whether physical or digital, is essential.
Communication is key to helping members understand their pension scheme and make the most of it. It’s the responsibility of the provider, you, and your pension consultant (if you have one) to create an effective communication plan.
All of this can be difficult for you to manage effectively, and this is where a Pension Scheme Governance service helps.
So, what is Pension Scheme Governance?
Pension Scheme Governance is a structured approach to reviewing and improving all these areas to ensure a pension scheme runs effectively, transparently, and in the best interests of its members.
It includes setting clear objectives, monitoring performance, managing risks, and holding stakeholders accountable.
We offer a true tripartite governance committee service where EBC, the provider and you look ‘under the bonnet’ of your scheme on at least an annual basis to ensure it is working effectively and providing excellent value for money for staff
Regular governance reviews aren’t just a tick-box exercise, they’re the key to unlocking better retirement outcomes for your employees and peace of mind for your business.
Ready to ensure your pension scheme delivers maximum value? Contact us today.
Jason Hamilton, Partner
