The responsibility of choosing a suitable workplace pension is one that weighs heavily on the minds of many a small business owner.
After all, most employers running their own business are experts in their field of business and not in workplace pension selection.
When it comes to deciding which pension to choose you can either go it alone or pay for somebody to help you reach a decision.
First steps
If you already have a pension scheme in place, such as a stakeholder pension, don’t assume it will be suitable for auto enrolment. The scheme you use to meet your workplace pension obligations needs to meet certain requirements. “There are strict rules that govern what constitutes a qualifying workplace pension scheme under auto enrolment rules,” says Steve Brice, senior consultant at LP Auto Enrolment Services.
Call your pension provider to find out if you can use your existing scheme for auto enrolment. If the answer’s yes, great news and ask the provider to put it in writing. But don’t forget that you’ll have to let the regulator know that you’ve met your workplace pension obligations by submitting a declaration of compliance.
If you need to find a scheme then you have several options.
Find a scheme yourself
The first port of call is The Pensions Regulator website which gives guidance on choosing a scheme.
When searching for the right scheme there are various things you need to consider. These include:
- How tax relief is applied and this affects lower-paid staff
- How much the scheme will cost to set up and run
- If the scheme is compatible with payroll
- Whether the scheme provider will send out communications to your staff
- If a scheme will accept all members of staff – ie it doesn’t place restrictions on earnings.
“Many pension providers have either pulled out of the auto enrolment market or will restrict pension scheme terms to employers that can make certain commitments over things like staff turnover and pension contribution levels,” says Brice.
“One of the key requirements under auto enrolment rules is that there should be a cap on the charges that can be taken from an employee’s pension pot. There are no restrictions on what an employer will be charged, though. This means some pension providers apply additional administration charges to employers that use their scheme. Read more about pension providers and choosing a pension scheme.
Use the default option offered by your payroll company or accountant
Some payroll companies or accountants provide a default pension scheme. You can use the scheme offered by the provider but it’s wise to do your own research as well to make sure you agree with the choice and can satisfy your employees that you’ve chosen wisely, should the need arise.
Remember that your payroll company and accountant won’t be able to give you advice on which pension to choose, unless regulated by the Financial Conduct Authority (FCA), which is unlikely. So a default option is not the same as a recommendation.
Get help from somebody else
You can take advice from an Independent Financial Adviser (IFA). An IFA, qualified to give advice on pensions, can recommend a pension suitable for your needs. But be warned, it can be costly to use an IFA. Find a financial adviser https://www.unbiased.co.uk/
Or you can use a specialist auto enrolment selection service such as LP Auto Enrolment Solutions or Pension Playpen.
These services will provide various levels of service from assessing your staff through to providing a list of recommendations. We’ve negotiated discounts with both of these services that we can pass on to our customers.
Where to go for more information
What to look for in a pension scheme
| Want some help with your workplace pension? |
| Biznus Payroll can help you with your pension choices, pension set up and ongoing management. |
| Get in touch: hayley@biznuspayroll.co.uk 01373 228300 |
