Business owners have hundreds of things to keep track of, so that’s why at BWCI Pension Trustees Limited (“BWCI”) we keep our pension plans straightforward and transparent. In fact, the burden on employers is much smaller than most anticipate, and the benefits to workers are often life changing.
The key word in all of this is ‘automatic’. Once the workplace pension has been set up and integrated into the payroll system, employers can relax, and workers can watch their individual pots grow.
Workplace pensions have been in the news a lot over the last few years with the States considering when and how to introduce secondary pensions. The States have now approved the Policy Letter and Legislation with a confirmed implementation date of 1 July 2024. Secondary pensions is the name given to the system where business owners will be legally obliged to automatically enrol their workers into a company pension scheme.
Under secondary pensions, employers have the right to choose any pension provider they want, as long as the pension scheme complies with certain minimum standards (what the States have decided to call an Approbated Pension Scheme). Otherwise, employers will default into Your Island Pension (“YIP”), basic pension scheme which the States is establishing designed for the smallest of employers.
We understand that employers will want to shop around before they make a choice, so here are some questions they need to be asking:
Experience/size of the company/who provides services
You may wish to find out how long the company has been providing pension services, the number of staff in Guernsey, the number of employers they provide pension services to, assets and size of membership of the Guernsey pension schemes it looks after.
Another important question is if they outsource some aspects of the service e.g. administration. Normally it is best to have a pension solution which is provided by one company and with the administration and trusteeship done locally as opposed to using an off-island platform or trustee.
What are your pension charges?
Ask pension providers to set out every single fee that will be charged. Are there fund fees (i.e. charges taken from members’ investments)? An administration fee? Commissions payable? Platform fees? Other intermediary fees?
Fees and charges can take a big bite out of pension growth, so it’s vital to understand exactly how much a pension costs. Percentage charges taken from members’ investments can have the most impact over the long term. Reducing charges by just a small amount can make a big difference to how much workers receive when they retire.
How are your pension investments performing?
There are big differences between the best and worst performing funds, and this can mean the difference between a comfortable and fulfilling retirement, or just getting by. While past performance is not a guarantee of how a pension plan will perform in future, it’s certainly worth checking alongside others. It is important that if you carry out a comparison of the investment performance, you use the investment performance net of fees.
Member website and support
Your employees will like to keep track of their pensions and this means they can see the contributions that you are paying in on their behalf. There are different pension scheme websites and you may wish to investigate the features which they have, how often it is updated and also if an App is available.
Some pension providers offer member presentations, and individual pension meetings to talk through personal pension issues. You may wish to check if there any additional charges for these or if there is a cap on the number of meetings before additional charges are payable.
In summary
In short, you should look at different pension schemes before you decide which is suitable for you and your workforce. Having an effective workplace pension is undoubtedly a good thing, especially in today’s hot jobs market. Workers are wising up to the fact that many of us are not putting enough aside for old age.
At BWCI we believe in making good choices easier and making retirement plans available to everyone. That’s why our plans have proven design features that make the process simple.
There are two pension products that BWCI offers for Guernsey employers. Firstly, the Blue Riband Channel Islands Retirement Plan, this is for companies that have Guernsey and Jersey employees but can be used by Guernsey only employers who would like an occupational scheme.
Secondly, the Blue Riband Guernsey Retirement Annuity Trust Scheme, this is available for Guernsey only employers.
Each company can choose the pension that works best for them, and we would be happy to discuss the differences between the two pension arrangements. Each is flexible and can be tailored to meet each individual employer’s requirements.
If you want to find out more about our different pension products in Guernsey, you can speak to our experienced and trusted team on 728432 or email pensions@bwcigroup.com