Until 2014, the number of UK residents contributing to a workplace pension had been stagnating at around one million for a number of years, according to Money Marketing. But, by 2016, this number had risen to 6.4 million, and it’s only set to grow thanks to automatic enrolment.
Soon, almost every business must offer a workplace pension scheme and enrol their employees on it. Workers can opt out if they wish, but business owners have a legal obligation to provide them with the option. So, if you haven’t yet looked at implementing your own scheme, it’s about time you did.
But, setting up your workplace pension scheme is just the beginning. We’ve spoken to Declan Harrington, a Financial Advisor at the multi-disciplinary practice Savage Silk, about the benefits of reviewing your pension programme on a regular basis. Here, he’ll explain how regular reviews can contribute to your employees’ financial security and help to keep your business running smoothly.
You can make sure you’re abiding by any changes in rules and regulations
There are already plans to make changes to the way workplace pensions work as time goes on. For example, up until 5 April 2018, employers will have to make a minimum contribution of 1% to qualifying employees’ pension pots. On 6 April 2018 this will go up to 2% and, from 6 April 2019 onwards, you will be expected to make a minimum contribution of 3%. Reviewing your pension scheme on a regular basis will help you to keep up to date with changes that are made to the regulations, which will help you to avoid having to deal with penalties and fines.
It’s also a good idea to visit the UK government’s website to see how workplace pensions have changed over the last few years, and sign up for email alerts so you’ll find out about any new developments as soon as they happen. This will help you to stay on top of things and avoid any problems.
You can ensure your scheme is working for you and your employees
Not all workplace pension schemes are created equal, and it’s a good idea to have regular meetings with your accountant or a financial advisor to make sure the plan you have in place is serving everyone well.
A key thing you need to consider is the range of investment funds different pension providers offer. You’re likely to find that most pension schemes come with a few options, and some of these will be less risky than others. So, before making a decision, you need to consider where your employees might want to put their money. However, you don’t want to give them too much choice when it comes to where they’re going to invest their pension pot, as this could deter them from making a decision.
It’s the default fund everyone will automatically be enrolled in that will be the most important. This should have a robust investment strategy, low fees, and a good track record. If you feel that your current pension provider isn’t fulfilling all of your needs both financially and in terms of support, it could be worth looking for a new one that does.
You’ll feel more in control
Nobody wants to feel like they’re in the dark about anything that’s happening with their business, and regularly reviewing your pension scheme can help you to keep an eye on things. It will ensure you’re always in the know about how many people have remained enrolled in your scheme, how much it’s costing you, and whether there are any areas in which your current programme could be improved.
If autoenrollment means you’re going to be offering a workplace pension for the first time, it’s likely you’ll want to check in on things quite frequently to begin with. But, once everything has settled down, you still need to review things every six months to a year, as this will help to ensure nothing goes awry.
As a business owner, it’s incredibly important that you monitor and review the workplace pension scheme you offer at least once a year, as this will help you to keep an eye on whether everything is working as it should. So, make sure you don’t neglect this important aspect of helping your employees to save for the future.