6. How To Enrol Employees
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Otherwise, here are some pointers about how you can do it yourself.
Defined contribution pension schemes tend to be popular amongst many employers as they do not stipulate a certain size of employee pension pot at retirement age. Therefore, employers are not forced to contribute over the minimum to employees' pension pots. However it is worth bearing in mind that your application for a pension scheme may not be accepted as different pension firms cater for different sizes of business. It is therefore worth starting this process a reasonable time before your staging date, in case you find it difficult to get your application accepted by some providers. Alternatively you can sign up with us now, in just a few minutes, at no cost to your business.
6.1. What To Look For In A Pension Scheme On Behalf Of Employees
Employers will need to ensure that the pension scheme they choose will invest employees' pension contributions in reasonable and profitable avenues for the duration of the scheme. This will mean ensuring pensions are invested sensibly both now and in the future. The pension scheme will also need to offer investment options that are conducive to the needs of your employees. For example, if the majority of your workforce is nearing retirement age then there is little point investing in avenues that will see a return in the very distant future. It is also important that the pension scheme chosen will ensure that your employees understand the different investment options that are available to them.
6.1.2. Does The Scheme Benefit Employees?
There are minimum contribution levels, which this guide will detail later. However, it is important that employers ensure that the pension scheme of choice will allow the employee and employer to contribute these minimum amounts, otherwise the employer will be failing in his/her employer duties and may face some of the penalties listed above.
Employers will need to assess the costs associated with each scheme and decide whether the scheme provides good value for money for their employees. This will need to be a continuous exercise to ensure that the scheme continues to be a sound option to grow employees' pension pots. This may involve comparing the costs involved for each scheme with alternative pension schemes, before coming to a decision on which scheme is the best value for your employees.
It is also important to establish whether the pension provider will take into account the interests of members of the pension scheme in the day-to-day running of the pension provider. It would also be prudent to have the business decisions made by the pension provider scrutinised by a third party to ensure that they are necessary and do not affect the interests of pension scheme members in an unreasonable way.
6.2. Accountability Of Pension Scheme Provider
A further thing to consider is ensuring that the people who invest your employee's money are continuously accountable and have their decisions regularly scrutinised. This will require employers to assess the competence of the investment decisions and the credibility of the structure put in place. The investments should be undertaken by FCA regulated people and firms who are professionally qualified to invest and have experienced trustees (the majority of whom are independent) looking after the employee's funds. Smart Pension has the highest calibre of each.
Additionally, employers must ensure that employees who are enrolled into a pension scheme have a way to communicate with, and give feedback to, the pension provider.
6.3. Communication To Employees
The pension provider must also clearly communicate the pension options to employees who are nearing retirement so they are fully informed about their pension options when they do retire. It is sensible to establish whether the pension provider will offer pension advice to soon-to-be retirees and the price of this advice.
There are many more factors that you should consider when selecting a pension scheme. Click on these resources for more information:
6.4. What Do Employers Need To Tell Employees?
Before you send communications to your employees, you must assess your workforce to identify who is eligible for auto enrolment.
There are three different types of Worker. Within six weeks of your staging date passing, you will need to send a written communication to these three types of worker employed by your company.
Our pension platform will assess your workforce for you. Our pension platform will also provide you with the required correspondence to send to your employees. We will also email the required correspondence to those employees who have email addresses, on your behalf. Click here to sign up to Smart Pension now