An employer has a responsibility when choosing a pension scheme to choose the correct pension for their workforce. This is where some time for thought is essential. The Pensions Regulator suggest 6 months. With our help it won’t take that long but it is important to have time for deliberation.
When choosing, its important to remember the organisation you choose has direct contact with your employees like any other pension provider.
Using an Independent Financial Advisor. They can talk you through the options, the pros and cons of each provider and help you choose in a well informed way. They will also help you through the communications and administration required. This will give you comfort that you have a complete understanding of what you are buying. Naturally this comes with a fee attached. BusinessHeads clients will have access to our IFA whom we’ve worked with for some years.
Other options when choosing a pension include:
NEST – This is the government’s pension provider and available to all employers and is free to set up. As with all pensions, there are charges taken from the employees’ pot but they are the minimum to cover costs. The default funds available are categorised by retirement age with investments in line with those timescales. There are also funds for employees with specific requirements to match their risk profile or beliefs.
A number of pension companies have set up pensions which meet the requirements set out by the government for auto-enrolment. You can find information about who these are on The Pension Regulators site.
When choosing a pension you should consider the following:
• Is this a net pay scheme or is there tax at source? This is to cover your staff who are paid below the annual personal tax allowance and would not receive tax relief with a net pay scheme.
• What are the charges? Many pension providers are levying high fees to cover the relatively high administration costs for the number of small contributions.
• What funds are available and do they suit your staff needs?
• Are their administration procedures compatible with your payroll software? (more about systems in my next blog)
• Will their systems will work out who needs to be in the scheme?
• Will they will write to your staff about the scheme? (more about this later too)
FSB Workplace Pension – The Federation of Small Businesses did extensive research to pull together their solution to this challenge and provide help and support alongside a Legal & General pension scheme. There are fees but they are reasonable and communications and calculations are all included.
How you tackle the task of choosing a pension scheme for your staff depends very much on your resources and your concerns about the ongoing situation for you and your staff. Some business owners will feel comfortable doing serious research before deciding, many, I suspect will plump for NEST . The FSB offers something in between but at a small cost.
This can seem rather daunting at first but don’t put it off. Contact your trusted advisor to get the ball rolling and get their perspective on your situation, alternatively you can contact me via email at: firstname.lastname@example.org
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