CIT; your ABC of auto-enrolment!

CIT     compliance investment trust  your three steps to success on the road to tomorrow’s pension. Yes I know there are a number of ways of pronouncing that “C” but if using a “sh”  helps you remember what I’m talking about- I’ve no objection. Worse has been said about my work!

Complianceit’s not easy and the burden is going to fall on payroll– as it always seems to. Payroll have been doing pension’s heavy lifting for long enough now to deserve a little more recognition.

Investment; beyond what you have to do, there’s an opportunity to pay a lot more into you and your staff’s pensions. Even if you pay the bare minimum, the money has to be managed by someone and how it’s managed , the cost of management and the monitoring of the managers is crucial to the size of the pension at the other end.

Trust- some of the best schemes in the country including the public sector schemes over which half a million are striking today – are distinctly unloved. Ironically, no one’s striking on behalf of the five million Brits who have no pension at all. Whether you are pension poor, pension rich or in the middle, the chances are you are fed up with the word pension. Winning people’s trust back int the process of retirement saving, of buying an annuity and of providing security for themselves and their family in later years will be the hardest challenge of auto-enrolment,

Compliance is the foundation on which all else is built. If you are an employer, an understanding of what Auto-Enrolment is, why it’s there and how it works needs to be spread throughout the operational function. Whether you are a mega -corp or a one or two man band, there will be no excuse for not knowing  what to do and – doing it!

Once the ops guys know what they are up to, it’s up to the executive to make the strategic decisions on investment. Is the company going to invest in staff pensions beyond the basic compliant levels , if so why? How is such an investment justified to shareholders? Is it sustainable? Conversely, is failing to invest a risk in itself?

The product that manages the money whether NEST or one of the other mastertrusts, the company’s own pension scheme or a pension issued by an insurance company via a group personal or stakeholder pension has to be fit for purpose. Investing in a rusty bucket of a pension plan means that the investment leaks away in high charges and poor management practices. These pension plans need to be right at outset and continue to be right for the needs of the staff. The investment needs to include money for making sure that the mechanism is maintained in pristine working order – remaining fit for purpose,

Trust-in practical terms, there is no other way of getting your staff to understand pensions than by taking them aside and talking with them. Apps are great, Facebook pages, interactive modellers, self-service admin sites – they’re all great. But they don’t amount to a row of beans against the effectiveness of a one to one engagement with a pension expert. For most companies, the pension experts are either in place or waiting to become experts. No company can afford to buy all the individual advice needed to empower people to become “their own CIOs (Chief Investment Officers) but we need to create internal infrastructures of pension experts who can make sure people know what’s going on and know about the key decisions they need to take- especially when they get to retirement.

So there you have it- three key areas for you to concentrate on CIT -compliance- investment and trust. Get the compliance right, get admin 100% watertight with straight through processing, no manual intervention and processes in place for everything and you are half way there

Get a decent pension provider, get your pension management at the right cost, don’t be afraid to negotiate and make sure you know what you’re paying for and why. Take advice on the default fund- it’s the most important. Make sure you have a mechanism that works to help your member make the right choices at retirement.

Finally, for heavens sake, go out and talk with your staff. Get them to understand the investment your company is making, the effort it is making to get the pension plan right and the ongoing governance in place to keep the pension up to scratch. Make sure that those people who are interested in pensions become your pension champions and make sure that those whoa aren’t get properly looked after with default choices that don’t tax them to make decisions they do not want to take.

Above all else, be enthusiastic. If you approach auto-enrolment in a mindset that it’s going to be a nightmare- it will be a nightmare. If you don’t get it , give me a call and I’ll show you how your company pension arrangement can make a difference to the happiness, productivity and long-term well being of your staff and by extension your company.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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