As a business owner you’ll know that, since automatic enrolment was introduced in 2012, you must offer a workplace pension scheme by law.
However, providing a pension is not just a matter of regulatory compliance, it can also be an effective way to attract and retain great staff and support your employees’ financial wellbeing.
Worryingly, according to research published in Pensions Age, nearly one-third of people in Britain are not saving enough for retirement. This means it’s more important than ever that you regularly review your workplace pension to ensure that it supports your staff and helps them to save adequately for later life.
If you haven’t reviewed your workplace pension recently, you and your staff could be missing out on schemes that offer better value and flexibility.
Read on to find out the benefits of offering an enhanced workplace pension and discover the advantages of regularly reviewing your offer.
Advantages of conducting regular workplace pension reviews
As a business owner, you may have initially set up a workplace pension for a handful of staff using one of the common schemes such as NEST.
However, just as your business may have grown and developed over time, pensions have become increasingly competitive. Many providers now offer valuable add-on perks that may not have been available when you originally set up your pension scheme.
Regularly reviewing your offer could allow you to align your business objectives with the needs of your employees. A report published in MoneyAge suggests that employers should review their defined contribution (DC) pension scheme every three years.
Here are some advantages of conducting regular reviews.
Benefit from the most competitive charges
Your pension scheme provider will probably charge some fees for managing the funds and investing the contributions made by you and your employees.
These charges could include an annual management fee, policy fees, and transaction costs. Understanding these costs is important as they can add up over time, making a significant difference to the returns your staff will receive.
Pension scheme charges have generally fallen in recent years. So, if you have an older plan, your employees could be missing out on newer, more competitive charging structures.
Enhance your workplace pension with popular add-on perks
Many of the leading pension providers offer a host of additional perks to make their offer more attractive. If you have an older scheme, your team may not be benefiting from some of these great add-ons.
Salary sacrifice or salary exchange is one of the most popular. It allows your employees to take less as a salary in exchange for your business making higher contributions to their pension. One big advantage of this perk is the savings that both you and your employee could make on National Insurance contributions (NICs).
Pension providers are also placing an increasing focus on financial wellbeing services. These could help your employees understand their retirement finances better and build their confidence in managing their own fund.
As an example, Royal London offers access to ongoing financial education and guidance whenever your employees need it. This can help them improve their financial knowledge, confidence, and wellbeing.
Reviewing your pension provider’s offer every few years could help you meet the changing needs and preferences of your staff by incorporating such perks into your scheme.
Offer a diverse range of investment options
Newer pension plans may offer a broader range of investment options for employees who choose to actively manage their funds rather than sticking with a “default option”.
For example, Aviva offers a choice of 12 different ethical funds plus a sharia option, allowing members to invest in funds that align with their values and beliefs.
By shopping around, you might also be able to find a pension provider who offers funds that reflect your company’s values and priorities.
For example, many people and businesses are becoming increasingly aware of the need to protect our planet and the future of the generations to come by behaving more sustainably. So, a pension provider who offers environmental, social and governance (ESG) funds might be more attractive to you and your team than one with a more limited range of funds.
Ensure your pension is user-friendly
A growing number of pension providers now offer apps and online portals to allow employees quick and easy access to their pension fund.
Switching to a new pension provider who offers such services could make it more convenient for your employees to monitor their pension and keep their retirement plans on track.
For example, Legal & General helps scheme members to understand their choices, and engage with their pensions, and picture what the options might look like for their own lives.
Features such as push notifications and reminders could improve how your staff engage with their pension and help them achieve their savings goals.
3 valuable reasons to offer enhanced pension benefits to your employees
Attract and retain top talent
A survey published in YourMoney has revealed that an attractive workplace pension is top of the wish list for 65% of prospective job applicants. So, by offering enhanced pension benefits you could attract the best candidates for vacant roles.
Employees may also be more inclined to stay with your company if you show a commitment to their financial wellbeing. So, offering an appealing pension plan could boost employee retention levels.
Improve employee engagement
Employees who feel valued and rewarded for their performance may be more likely to feel satisfied in their work. This could contribute to higher levels of morale, engagement, and productivity.
Also, offering flexible pensions that your staff can tailor to meet their unique retirement goals could encourage them to be more proactive when it comes to building their fund. This could potentially reduce financial worry and stress.
Enhance your business’s reputation
Offering a desirable workplace pension could enhance your business’s reputation as an ethical and caring employer.
By improving brand perception, you could attract more business while also supporting employee morale and retention.
How to switch pension providers
Switching to a new scheme or pension provider could be a lot easier and less time-consuming than you might think.
Many pension companies manage the process of switching as part of their service.
If you’d like some help reviewing your pension plan and exploring alternative options, we can help.
To find out more, please get in touch. Email firstname.lastname@example.org or call us on 01454 416653.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future results.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.