Andy Eason, director of Acumen Employee Benefits, explains why now is the ideal time to review all aspects of your workplace pension.
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I’m sure that like many of us who subscribe to Facebook or other social media, an internal site algorithm will throw up a memory from four to five years ago as a reminder of past events; and no doubt you will be surprised by the time that has elapsed since the item posted and what has taken place since.
This observation has never seemed more relevant than to the rollout of auto enrolment, when even the smallest businesses had to have a functioning workplace pension in place by early 2019, over four years ago!
After the rollout of pension auto enrolment
It is hardly surprising that this milestone seems lost in the mists of time when you consider the momentous events that have taken place in the ensuing period, ranging from the Covid lockdowns, Brexit, global conflicts, changing environmental impacts around the globe and, latterly, the cost-of-living crisis.
The point being that despite these influential aspects, employer’s duties under the auto enrolment legislation has remained constant and not merely a ‘once and done’ requirement, especially the administrative responsibilities.
For example, even if as a business you were one of the last to become fully compliant in 2019, you will have to have completed at least one triennial re-enrolment exercise, completed another statutory declaration, and filed all the supporting documentation.
Reviewing your workplace pension
It has certainly been a challenging four-to-five-year period for all businesses, so, this would be the ideal time to take the opportunity to review all aspects of your workplace pension, ranging from administration to member engagement and default fund performance.
We mentioned earlier retaining supporting documentation, the majority of which regulations demand have to be kept for a minimum of six years, with only member opt out notices kept for four years. Which throws up a simple question: are your auto enrolment records complete and easily accessible?
After all, your business will have had many other challenges to face over the proceeding period.
The chances are you may well have had a turnover in staff, so whilst your original population were well informed about their pension, how well does that apply to recent recruits? How often do your scheme advisers or consultants support your workforce with communications and engagement of their retirement options?
It is not only in corporate circumstances that there are changes. During the last few years, how many of your staff have become parents, married or divorced, and need to update their pension details, in particular the expression of wish form ensuring that their pension fund goes to the right people in the event of their death before retirement?
This is a straightforward exercise that can be completed with guidance from your advisor.
Check your workplace pension default fund
Most scheme pension members do not feel comfortable or have enough confidence to select their individual retirement investments and therefore elect to invest in your workplace pensions default fund that is the responsibility of the employer to select.
Some of the external economic changes previously mentioned may have impacted on the suitability and sustainability of your current default arrangements.
Markets are considerably different now from 2019. China has only recently returned to full capacity following the Covid challenges. Some industry sectors have benefited during this time, particularly in the high-tech market as the dominance of online service provision has increased, whilst others in traditionally strong manufacturing areas such as automobile production have struggled.
This of course represents a natural evolution of a market driven by customer requirements, however, it could mean that if your default fund still has the same composition of investments as when you implemented it some years ago, it may not reflect either your changed workforce or potentially more appropriate areas of investment to meet your employee’s needs.
This is undoubtedly a good time and opportunity to review your current workplace pension arrangements, utilizing the knowledge and skills of your employee benefits scheme advisor. This does not necessarily mean significantly more expense as ranging from more efficient administration to engaging your staff with their pension often means working smarter not harder.
Find out more about reviewing your workplace pension with Acumen or email info@acumeneb.com.
