Is it time to review your workplace pension scheme?

Pensions are considered one of the major planks of your employee benefits package. A good pensions package can also be a key tool for recruitment and retention as it can add considerable value to your employees’ remuneration and experience of work. As most employers legally have to set up a pension scheme, it makes sense to use yours to enhance the benefit to your employees as much as possible.

A scheme that meets minimum requirements may be fine, but it won’t differentiate you from the competition. There are some simple, cost-effective ways for you to enhance your scheme and boost its impact and value to your employees.

One option is to add salary and bonus sacrifice options. These reduce both employer and employee National Insurance (NI) contributions and make them a more tax-efficient way to enhance remuneration compared to salary increases.

Another tax-efficient option would be to match any extra pension contributions your employees make, or you could even offer an uplift, which means you match the contribution plus, say, 10%.

Why is a pension review important?

The past few years have seen big changes to workplace pensions, resulting in annual management charges and costs coming down as well as improvements in the overall proposition from pension providers. Because of this, it could be that your workplace pension scheme is no longer offering the best value for your employees.

A regular pension review can therefore help to ensure that your scheme is the right one to help your employees meet their retirement objectives. While the impact on the company may not be significant, failing to review the pension scheme can result in extra charges being taken out of an employee’s pension pot, reducing the net amount being invested during their career lifetime.

In fact, The Pension Regulator (TPR) requires employers to regularly review their workplace pension scheme, so that they can satisfy themselves and demonstrate that it represents good value for its members. This means reviewing four critical areas: scheme governance and management, investment, administration, and communication.

As well as ensuring that the management charges and fees are competitive, you want to be happy that the default fund is performing as expected. You also want to appraise the level and quality of service received from your pension provider as well as their employee communications channels. Finally you need to review and evaluate the trustee board and the overall scheme governance.

As time passes, it also makes sense to review whether the scheme’s features are still appropriate for your workforce. For example, if you have recruited several low earners since its inception, you need to make sure they get tax relief on contributions by using a relief at source rather than a net pay arrangement.

Alternatively, it could be that only an employee’s base salary is pensionable in the scheme you offer. If you have staff who receive commission or bonuses, you may want to adjust your pension scheme to allow these remuneration types.

Could you improve your employee engagement?

Improving how your employees engage with their pension, both from your pension provider and your own workplace pension communication strategy, can make a big difference to your employees, and help them on the road towards achieving the retirement they aspire to.

Over the past few years, many providers have improved their member communications and now offer Apps, push notifications plus regular information and reminders. They have also made it easier for employees to manage their pension and to take action when needed.

As part of your pension review, you should explore what other pension providers are offering by way of employee communications. It’s possible that the review shows all you need to do is upgrade with your existing provider.

Could you get more flexibility and financial wellbeing support?

The pensions arena has witnessed many changes over the past few years including the pension freedoms, state pension age changes and default retirement age changes. Most providers can accommodate these variables, but a review will confirm if this is the case with your existing pension.

In addition, many pension providers now offer added value financial wellbeing content as part of the pension, such as other workplace savings solutions including ISAs or budgeting guidance.

How Kellands Corporate can help

Obviously, businesses can conduct a pension review themselves, to ensure their scheme is both still fit for purpose and is offering good value for its members. However, most do not have the time, knowledge, or experience to do so.

We at Kellands Corporate can help you conduct a detailed review, including checking against other schemes to ensure your pension is still the best option for your employees. Following the review, where appropriate we can seek to negotiate better terms with your existing provider or help you move to a new scheme if this is recommended.

To review your pension scheme and other pension arrangements, contact us today.