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Workplace Pensions – should you do-it-yourself?

Workplace Pensions – should you do-it-yourself?

 

 

If your company’s staging date is approaching, you may be thinking to yourself ‘What’s going to be the most effective way to approach this in order to achieve the best outcome for your business and your employees?’.  This is a very good question!

 

 

 

 

 

You actually have a couple of options – either do some fairly extensive research yourself and set up your own scheme with an online DIY solution - you’ll need to choose your scheme very carefully - or you can ask a specialist like us to do the job for you.   If you don’t know anything about pensions it’s really difficult to know which route to go down, so I thought I’d just outline very briefly what you’d need to do if you do decide to DIY.

 

 

First of all you need to choose your scheme – there are well over 100 pension providers to choose from.  Make sure you choose a scheme that’s approved by The Pensions Regulator or the FCA, and if you’re choosing a master trust then make sure it meets the Master Trust Assurance Framework set out by the Regulator, otherwise it could encounter serious problems when the Pensions Bill comes into force this year. 

 

 

Compare scheme costs – employee charges, employer charges, contribution charges and administration charges.  These can be quite hard to pin down as providers don’t always make them obvious on their website, but there will definitely be costs involved.  Make sure you’re clear on what the costs are to you and your employees before you choose your scheme.

 

 

Look at investment performance and compare performance of each scheme over the last 3 years – has investment growth been slow and steady, or more risky and erratic?

 

 

You’ll need to design your scheme in terms of tax relief basis for employee contributions, postponement policy, salary and contribution combinations (which directly affect the contribution rates you’ll need to pay) and auto-enrolment pay reference periods.  You’ll also need to make sure that your pension scheme integrates smoothly with your payroll software.  Designing your scheme properly at the outset will save your business an awful lot of money in the long run.

 

 

It’s a good idea to provide your employees with clear and comprehensive communications about the benefits of your chosen pension provider so that they understand the value of the pension scheme you’re providing, and you’ll need to update your employment contracts and, if you have them, your staff handbooks.    

 

 

It’s really important that you understand the processes behind auto-enrolment so that you know exactly who is responsible for each process.  For example, who will be carrying out employee assessments each pay period, who calculates employer and employee contributions, who is responsible for producing and issuing statutory employee letters, who will be uploading a contribution file to your pension provider each week or month and who is going to deal with opt-ins, opt-outs and contribution refunds.  You payroll administrator may offer to carry out these tasks on your behalf, but they may only choose to do some of this administration, in which case you need to pick up the rest.   

 

 

One of the most critical things to get right is to provide your payroll administrator with clear instructions about how to administer your scheme through their payroll software.  They will need to know how you’ve designed your scheme and who you’ve chosen.   

 

 

If you don’t have the time to do all of this yourself, we can do it for you!  We’re qualified workplace pension specialists and we’ll make sure you get it right first time.  We charge a one-off fixed fee which is dependent upon the size of your business, and we’re happy to continue answering any questions you may have for the foreseeable future too, at no extra cost.

 

 

If you’d like to take the pressure off yourself and appoint a trusted, specialist company to help you instead, please give me or Adele Webb a call on 0800 160 1233, or fill in your details on our Get Started page and we’ll get back to you.   


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