and governance reports from their independent governance committees or trustee boards. Many will also offer a telephone helpline service and larger employers may get on-site faceto-face support. Most, if not all the above, should be free to use. It’s well worth asking the question about what is available. Will some schemes enable employers to make a single jump to the 2019 rates and how would this affect employers’ transition to the new rates? Some employers will choose to contribute at the 2019 rate as early as 2018. Providers are not geared to help – other than to receive higher than expected contributions. If you are looking to take this step, you should be speaking to an employee-benefits consultant or experienced independent finance advisor: there are costmitigators such as a salary sacrifice that can ease the shock of a jump from 2% to 8% of relevant earnings. How can different schemes help employers optimise their pension schemes to minimise opt-out rates?
How important is it for employers to continue to review and seek advice on the pension provisions they have in place? It will become increasingly important. There is a rule of thumb that when a pension pot is worth as much as a member’s car, it becomes important. And if it is important to a member, a workplace pension will be important to an employer. If the employer has been seen to have shown due diligence in the selection and governance of its pension then it will receive a positive return on investment. If an employer can’t show it has paid attention to pensions then the workplace pension can become a risk. In America, employers are regularly subject to class-action lawsuits from employees angry that they have not carried out their duty of care with regards to the workplace retirement plan. We have not yet seen this in the UK but with over one million employers due to have staged auto enrolment by the end of this year, it is very likely that we will see litigation on this side of the pond. Pension PlayPen helps employers to choose a good workplace pension and in the future it will help employers ensure their pension remains relevant, providing the right technology at the right price. To find out more about Pension PlayPen, click here.
There are two reasons employees will opt-out: either they can’t afford the contributions or they see better value in not paying them. Properly advertising your scheme using the services provided by your adviser or provider can help employees stick with their plan. However, the best help is the endorsement of auto enrolment by the employer themselves. Employers who have confidence in their workplace pension provider are more likely to promote their scheme and consequently have lower opt-out rates. Genuinely good providers will help employers to have this confidence.