We are all living longer and apart from employer sponsored schemes, very few people are saving for their old age. This is a huge political problem. Previous governments tried to solve it by introducing the concept of Stakeholder pensions which had low costs. However, this initiative failed because the employer was not required to make a contribution.
Workplace pensions were phased in from October 2012. The employer now needs to enrol all eligible employees in a Group Personal Pension or enrol them in a master trust scheme such as NEST (National Employment Savings Trust).
What is NEST?
NEST (National Employment Savings Trust) is a simple, low-cost pension scheme. NEST operates like any other trust based, multi-employer defined contribution occupational pension scheme, but it is focused on a target audience of low to moderate earners.
Group Personal Pensions
Most employers (particularly those paying higher earnings) will offer employees membership of a Group Personal Pension. Such a plan will normally offer a wider selection of fund choices than NEST and allows the plan to be easily transferred to a new employer’s group personal pension plan when the employee leaves service.
Employers must not get complacent
Once an employer has set up a Group Personal Pension plan it is easy to get complacent. However, employees are now increasingly taking the terms of the workplace pension into account before accepting a new job. It is therefore important to be able to demonstrate that you are regularly reviewing the contributions, fees, fund choices, fund selection and performance and flexibility of the chosen scheme. We have noticed from the schemes we offer that employees are now demanding more face to face presentations and surgeries as they have an active interest in achieving a financially secure retirement.
Nicholls Stevens have been offering advice to employers on workplace schemes for over 40 years. Get in touch if you think you should blow the dust off your workplace pension and give it a review.