Is your workplace pension still meeting your people’s needs?

By Ian Bird

It’s fair to say that since automatic enrolment came into force in 2012, it has positively impacted people’s plans for retirement and encouraged even more people to save for their future. However, as an employer, have you considered whether the workplace pension you have in place is still the best option for your employees? 

As an avid believer of financial wellbeing, I am constantly thinking about best practice. And there are some aspects of pension that employers, like yourself, should regularly review to help ensure that your workplace pension remains fit for purpose and achieves the best outcome for your people, as well as remaining cost effective for you.  

Review your costs 

Is your pension offering good value for money for you and your employees? If you haven’t reviewed your pension scheme or provider for some time, you may be paying a higher annual management charge (AMC). Many pension providers have reduced their annual management costs in recent years, it may be worth exploring if your costs could potentially be reduced.  

Pension set-up and available funds 

Have you reviewed your pensions default fund? Many employees often remain in the default fund, so making sure this is still relevant for your people is important. Of course, the default fund is chosen to meet the needs of the average scheme member, but areas you may wish to consider reviewing are: 

• Is your default fund still designed for annuity purchase or is it preparing for pension freedoms? 
• What is the default retirement age on the scheme? Remember state pension age is no longer 65! 

If you are unsure about how to answer these questions, then that could be an indication you are falling short of best practice and your scheme needs a review. 

Furthermore, as more people are becoming concerned about climate change, for many pension members the value of their investment may no longer just be about what money it can make them. Many may also care about the positive impact their money can have. Should you be considering an ESG (Environmental, social and governance) default fund for your pension? 

Governance  

Do you know whether your pension meets the relevant governance and legislative standards? It is essential that you understand your responsibilities. The Pensions Regulator (TPR) requires you to make sure your workplace pension is monitored regularly and delivers value for money for your people.  

So, just how often should you be reviewing your pension? Well, this depends on the scheme you are running and the amount of money under investment, but some basic governance should be performed every year. And, in terms of reviewing your pension set-up and provider, if your Governance review doesn’t highlight any anomalies, I would suggest reviewing this information every 3 – 5 years. 

In addition to this, and just as important, is how you engage your people with their pension. I would suggest using a regular, multi-channel approach which includes email, educational content on your online portal, webinars and annual pension presentations, to name a few.  

If your employees believe their pension is competitive, well run and provides the options they need, they are likely to feel valued, engaged with you as an employer and more productive.  

Secondsight has been working with employers for more than 25 years and would be happy to discuss and review your pension. Contact us for your free 30-minute benefits review meeting on info@second-sight.com or 0330 332 7143. 

Secondsight is a trading name of Foster Denovo Limited, which is authorised and regulated by the Financial Conduct Authority.