The Pension Regulator has published an interesting document entitled “A quick guide to selecting a good quality pension scheme for auto-enrolment”. Reading it, I was conscious of just how hard the Regulator is trying to get people to take the right decisions about pensions and it is absolutely right when it asserts.
You should also choose a good quality
pension scheme that is well run, offers
value for money and protects your workers’
retirement savings. Selecting a good quality
pension scheme is not a difficult process and,
from your perspective, it doesn’t have to
cost more than a scheme which is of a lesser
As the title suggests, this is a DIY manual for employers who are coming afresh to the subject and it’s very well written. Instead of using intimidating language, it uses terms saving in it. that everyday people would use and it’s refreshingly candid.
But it is written from a sometimes odd perspective.. take this
You may be offered the option of setting up
a new trust-based scheme if you are using
the services of a financial adviser. This would
involve your organisation providing a board
of trustees who run the scheme. Our evidence
suggests that most employers will find that
it is not cost-effective to set up this type of
scheme unless it has at least 1,000 people
I am a financial adviser to companies looking to set up pension schemes and I have not offered this option for some years. For exactly the reasons outlined here. It is possible to operate the defined contribution kind of pension scheme using an existing trust and sometimes this is a good idea but we are talking here of companies who have a long history of pension provision to their staff- typically on a defined benefit basis.
This odd statement got me asking “where is the author’s head?”. My conclusion as I read on was “very much in the right place”. There are a number of sections – particularly those on the safety of the pension scheme (entitle simply “Pension Provider”) and the beautifully crafted piece on “communications” which I am quoting directly in the help sections of http://www.pensionplaypen.com.
The Regulator’s document is good on explaining what features a scheme needs to be Qualify to be used as a workplace pension but light on any detail surrounding what makes for good support to an employer looking for help fulfilling “employer duties”. We suspect that it will be the Providers of workplace pensions who will do most to keep employers compliant though the Guide is silent on this.
And the author’s head has not quite got around how an employer can organise a proper comparison of the options available. This is what we call “the employer’s journey”.
The Guide asks you to click on http://www.abi.org.uk/Insurance-andsavings/Products/Pensions/Automaticenrolment/Providers and this takes you to a page listing 11 insurers two of which (Prudential and HSBC Life) no longer market workplace pensions to the general customer. The list is incomplete (in relation to insurers – where is Zurich, or BlackRock both of which run AE arrangements?) It contains B&CE whose workplace pension is only partially insured (People’s Pension) and of course there is no mention of the mastertrusts like NOW and BlueSky.
NEST are given pride of place and there own website address.
My impression is that when it comes to understanding the legal governance of workplace pensions, the Pension Regulator’s Head is in the right place. But when it comes to understanding how to go about getting help in selecting a pension, the Regulator’s head is scrambled!
It is high time that a long-list of providers of DC workplace pensions generally available to the public was published. We include talking about the excellent Plumber’s Scheme (which is DB) and one or two very small mastertrusts which we have not researched but here is the Pension Plowman’s list of workplace pension providers whose wares are within my terms of reference.
BlackRock Contract and Mastertrust
Fidelity Contract and Mastertrust
Legal and General Contract and Mastertrust
Merchant Navy Officers Pension Plan
National Pensions Trust
Pensions Umbrella Trust
Plumbing and Mechanical Services UK Pension Scheme
The Pensions Trust
Standard Life Contract and Mastertrust
Zurich Contract and Mastertrust
Where there is a huge gap in the “employer’s journey” is in getting to a position where employers can properly understand what is available to them. I am not being rude about the Pensions Regulator (hi!), I am simply pointing out that, as with their earlier comment about what advisers advise on, they simply don’t understand DC distribution (which is what the FCA are supposed to do -but don’t either).
The Regulator’s Guide finishes with a number of questions you can ask Providers.
These are the right questions, but how do you find your providers?
For an answer to that question click on https://www.pensionplaypen.com/choose-new-pension . We haven’t fully launched our new service yet (we are expecting to in September) but we are getting there. When we do, we intend to incorporate the wisdom of the Pension Regulator! I thoroughly recommend this document to any employer.