With offering a Workplace Pension Scheme a mandatory requirement since the introduction of Automatic Enrolment, many employers may feel that having set up a scheme, their job is done and dusted.
In reality, employers have an obligation to ensure their pension scheme remains fit for purpose, both in its suitability for its members and how it’s being managed. Conducting regular reviews of your scheme can ensure you and your employees are getting the most of out of it.
Here are several reasons why conducting a periodic review of your workplace pension scheme provider is essential:
Fees & Charges:
Examining the fees and charges associated with your workplace pension scheme is vital. It is likely that the demographics of the scheme are different to when the scheme was established, or even last reviewed, in terms of the number of members, the annual contributions being paid, and the value of funds held. In the same way as you would review personal savings, investment, and insurance arrangements to make sure you were getting value for money, the same principle applies to the workplace pension scheme you operate for your employees. High fees can erode retirement savings over time, diminishing the value of pension pots, and so comparing fee structures with other providers can help identify cost-effective options that optimise your employees’ retirement savings.
Performance Evaluation:
Within your workplace pension scheme, you have to make available a default investment fund but if you don’t review that fund how do you know if it is a good place for your employees to be saving into. Assessing the performance of the fund against its benchmark, as well as the performance and volatility ratings of similar options available with other pension providers, enables you to determine whether your provider is delivering satisfactory returns relative to those benchmarks and industry standards. Consistently poor performance may warrant consideration of alternative providers.
Investment Options:
While most people will never move from the default investment that is provided within their workplace pension scheme, evaluating the range of investment options offered by your scheme provider is essential. This ensures that there are solutions available for everyone no matter what their investment, religious or ethical investment beliefs might be, or how they regard their own attitude to investment risk. Having a wide selection of investment funds available ensures you are offering employees the opportunity for well-balanced portfolios tailored to their preferences. Have you assessed whether your provider offers sufficient choice and flexibility to meet your employees’ needs?
ESG Considerations:
More now than ever before, the consideration of environmental, social, and governance (ESG) factors in saving for retirement has become increasingly important for individuals as they seek to align financial goals with broader societal and ethical considerations. Does your workplace pension scheme provider integrate ESG criteria into their investment decision-making and do they offer sustainable investment options for those who are keen to have their retirement savings invested in such a way.
Customer Service and Support:
Assessing the quality of customer service and support provided by your workplace pension scheme provider is crucial for addressing inquiries, resolving issues, and receiving timely assistance when needed. Have you, or any of your members, had poor experiences when requiring help and assistance, and is your provider’s Web or App functionality user-friendly, providing all the tools and guides that would be expected in the current digital environment? A provider that prioritises customer relationships fosters trust and satisfaction among their pension scheme members.
At Menzies Employee Benefits our ‘Managed Pension Scheme’ service provides a regular review and report on each of the above topics for our corporate clients, with recommendations on any areas of provision that we feel should be addressed. Conducting such a regular and comprehensive review of the workplace pension scheme provider enables our employers to make informed assessments of performance, fees, investment options and customer service. By evaluating these factors, and considering alternatives when necessary, it ensures that they continue to provide a scheme that is fit for purpose and remains aligned with a changing market and legislative world, as well as their own corporate goals.
If you would like to discuss how Menzies Employee Benefits could help you review your workplace pension scheme, please get in touch.
The information provided is for general information only and is not intended to address the particular requirements of an individual or business. It does not constitute any form of advice or recommendation by Menzies Employee Benefits or Menzies Wealth Management Ltd and should not be relied upon by individuals in either making or refraining from making any financial decisions. Where necessary, you should seek appropriate professional advice before acting on any of the information provided.
Menzies Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority, firm reference number 486548. Registered in England and Wales, under company number 06597008. Our registered address is 4th Floor, 95 Gresham Street, London, EC2V 7AB.
For further information and to discuss your specific requirements, please contact one of the team at Menzies Wealth Management via the contact form below:
Contact Our Experts