Chase de Vere has never been shy to highlight the importance of clients having regular reviews to check that their pension scheme remains the most appropriate available. So, we are pleased to announce that we are the recent beneficiaries of such an exercise ourselves.
Having been with the same pension provider for some time, conducting a whole-of market review enabled us to identify another one that suits us better – after initially narrowing down the choice to between a handful that met our particular objectives.
As we are experts at running these types of products, it should hopefully not come as a great surprise to learn that the whole exercise has proved seamless and that the benefits have been considerable.
One of our key objectives was to reduce our management charges, and these are now significantly lower. Another was to improve employee engagement, and we are confident that the more up-to-date tools offered by our new provider will make all the difference in this respect.
The communications exercise, which we are currently in the process of carrying out to emphasise the benefits of the new scheme to the workforce, isn’t doing engagement levels any harm either.
It’s being largely conducted online, because many employees are still working from home, and includes pre-recorded explanation webinars with HR and Chase de Vere advisers — which employees can watch at their leisure.
We feel that all employers should at least be having the conversation about the need for such a review once every five years as a minimum, even if it doesn’t actually result in us broking the market.
They may actually have to raise the issue sooner if something crops up that could impact on the need, such as a merger or acquisition. Chase de Vere should, however, be able to flag up when this is necessary as a result of conducting our regular annual governance reviews to ensure that the provider and default fund remain adequate.
Should a whole-of-market review be considered appropriate, we can consider every scheme that could potentially provide a better solution to the client in question.
If the client wants it – and some smaller ones don’t – we can involve them directly in the final selection via a beauty parade of the short-listed providers. Typically, this will involve no more than three choices, otherwise it can get confusing and tiring.
We will loop in all parties to ensure that the scheme is fully compliant, that it maximises engagement levels with employees and that it meets with the company’s specific objectives.
Listening to feedback from employees can play an important part in establishing such objectives, particularly when it comes to scheme improvements.
Employees may, for example, be dissatisfied with the functionality of the website or with the range of ESG investment choices. Or they may want a phone app that’s easier to use.
Some employees, especially those who have recently come from employers with highly competitive pension scheme charging structures, may even feel the charges are too high.
Of course, our project planning also includes full support to employees in transferring their previous company pension scheme if they wish, something often overlooked but really important to ensure that maximum appreciation is generated for the change.
We can also point to opportunities that the company concerned may not have considered, such as the ability to save money by implementing salary exchange. The approach, which involves employees giving up entitlement to a proportion of salary in exchange for pension contributions, reduces their tax and NI burdens and usually also results in lower NI contributions for employers.
Even if an employer is already using salary exchange, we might still be able to save them considerable sums by switching the basis on which it is offered from one where employees need to opt in if they want it to one where they have to opt out if they don’t want it.
For example, we recently saved a client £25,000 by doing this. The scheme, set up by a previous adviser, originally only had 20% of members using salary exchange because it was being offered on an ‘opt in’ basis. But, once we had switched it to an ‘opt out’ basis, the take-up rate soared to over 99%.
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Content correct at the time of writing and is intended for general information only and should not be construed as advice.