By Craig Pritchard Dip PFS Senior Corporate IFA Consultant, Integrity365, a Beavis Morgan group company.
Think back to 2012 and what is your first memory? It may relate to a personal event such as getting married, the birth of a child, a dream holiday or a key change to a business you operate or work within. It is very unlikely that your first thought is about the year that Automatic Enrolment started, initially for the largest organisations and over subsequent years for the remainder of businesses with ‘eligible’ employees.
The introduction of Automatic Enrolment has changed the pension landscape and resulted in over 10 million ‘new’ savers being enrolled into a workplace pension scheme. Contribution rates are now fully effective at a headline rate of 8% combined employer and employee and the opt-out rate remains low, despite the pandemic.
If you own your own business or are a director of one, you may feel the job is done, your employees are enrolled and that you are contributing towards their retirement provision. However, if you put your ‘pension hat’ on and think back to when you set-up your workplace pension scheme to comply with your employer duties, it is very likely that the needs of the company and employees have changed for several reasons:
The company may have grown resulting in more employees being enrolled than initially expected.
- Contributions paid into the scheme would have increased as the minimum contribution threshold reached 8%.
- As your employees save, the value of the scheme assets will be increasing and very likely represent a significant capital value.
- In 2015, Pensions Freedoms became effective and transformed how pension benefits are accessed at retirement (or age 55 onwards).
- Individuals now have far greater choice as to how they access their pension and this potentially impacts scheme default investment fund.
- The person(s) responsible for setting up and initially managing the scheme may have left the business and taken valuable knowledge & experience.
It is a legal requirement for employers to automatically enrol eligible employees and the Pensions Regulator (TPR) are flexing their muscles by coming down hard on companies that do not meet their obligations. When completing audits, TPR is checking a wide range of areas to include ensuring employees have been correctly enrolled, statutory communications have been issued to employees within the prescribed timelines and scheme payments are being paid to the scheme provider within legislative requirements. Failure to comply could result in the TPR issuing fines, potentially damaging employee and employer relationships, in turn harming the reputation of the business.
What can you do?
1. Either directly or through an adviser, engage with the scheme and ensure measures are in place to review and monitor the scheme and your internal processes. It is likely that your employees feel someone within the business is reviewing the scheme to ensure it remains compliant, competitive and keeps pace with changes to the corporate pension market.
2. Consider the size of your workplace scheme and the value of funds under management. Do you feel you currently have sufficient processes in place to ensure it is being managed effectively for the benefit of your employees?
How Integrity365 can help?
We have a specialist team of corporate pension advisers who focus on providing professional support to employers and employees, in relation to their workplace pension scheme and wider employee benefits. Every company has different needs and by working together, we will understand your key objectives and as required, help formulate a strategy to ensure best practice is adhered to.
All Integrity365 corporate advisers and personal advisers work very closely together.
To find out more, contact Mariske Byrnes or your usual BM Connect contact who will put you in touch with a member of the Integrity365 team.
For more information about our partner business, Integrity365, visit integrity365.co.uk.
10 million new savers enrolled into a workplace pension scheme.
126k+ Fixed Penalty Notices issued in 2020*
£15 billion more saved by eligible individuals annually than in 2012*
10x more staff automatically enrolled by March than in 2012*
*Source: The Pensions Regulator