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Choosing a pension scheme

Research by The Pensions Regulator has shown that one in 10 employers do not know how to choose a pension scheme or think they will find it difficult.

The Pensions Regulator recommends employers should have a scheme in place six months before their staging date and should start planning for automatic enrolment, including identifying a scheme 12 months ahead.

The regulator has updated the information and tools on its website to make it as straightforward as possible for smaller employers, who may not have experience of pensions, to identify a suitable scheme for their staff.   This includes a quick guide to choosing a scheme http://www.thepensionsregulator.gov.uk/employers/finding-a-provider.aspx

To help employers choose a scheme, the regulator has also published a list of master trust schemes that are suitable for automatic enrolment http://www.thepensionsregulator.gov.uk/employers/finding-a-provider.aspx  These providers will accept employers of all sizes and have achieved master trust assurance which gives employers confidence that the scheme they have chosen will run to a high standard.   Employers do not have use a scheme from this list but can choose any scheme suitable for automatic enrolment and which meets their needs and their staff. The regulator also publishes information about the scheme set up by the government (NEST) and schemes listed by industry bodies.

Automatic enrolment schemes

To be used for automatic enrolment, the scheme must meet certain criteria.  This includes not requiring staff to do anything to become active members or make investment choices.  It will need to be an occupational or personal pension scheme and be tax registered.  There are also minimum requirements regarding the level of contributions which must be paid into the scheme.

Employers with existing schemes

If an employer has an existing scheme for their staff they will need to check whether it is suitable for automatic enrolment.  The pension regulator’s website has a tool to help employers with an existing scheme decide whether or not it is suitable.  http://www.thepensionsregulator.gov.uk/employers/does-your-existing-scheme-qualify.aspx  Employers who find that their scheme is not suitable will need to identify a new scheme.  

What to check when choosing a pension scheme

When choosing a pension scheme, employers should check whether the scheme will be compatible with their payroll software and will generate letters to staff to tell them about automatic enrolment.  Employers should also decide what level of service they want, for example some schemes will assess workers and manage opt ins, and should weigh up costs and charges against the level of services offered.  Employers will also need to consider whether the scheme offers investment options that suit their particular staff needs - such as ethical funds or funds that are compliant with Sharia law.

 

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