Since 2012, the UK has seen a transformation in workplace pension provision as a result of legislation requiring employers to ‘automatically enrol’ their workers into a pension. As of September 2017, the Pensions Regulator reports that 807,000 employers had declared compliance with the legislation and that a total of 8.4 million ‘eligible jobholders’ had been enrolled.
There is a general assumption that once employers have met their initial duties by enrolling eligible jobholders into a compliant scheme, re-enrolling those who had opted out every three years, and enrolling new workers as and when they start work, this is largely ‘job done’.
However, we believe that employers should be wary of taking their eye off the ball when it comes to automatic enrolment. We note that there are examples in other countries of employers facing legal action where they are deemed not to have done the right thing by their employees when it comes to pensions. Employers who wish to protect themselves against these potential risks may wish to consider:
- choosing a plan in the first instance, to undertake due diligence beyond simply selecting any ‘compliant’ plan.
- recognising that automatic enrolment relies heavily on ‘defaults’ and that employees may be very passive in the whole process. This means that in choosing a scheme, employers may want to look at service to members, suitability of the default investment fund and other investment options and comparative levels of costs and charges. Employers may also wish to engage with their employees to ensure that they are aware that statutory minimum contribution rates may not be sufficient to enable workers to afford to retire at a time of their choosing
- reviewing the pension scheme on an ongoing basis
- ensuring that record keeping is of a high standard, not least given the large number of individuals who will build up ‘deferred’ pension pots as they change jobs repeatedly.
Why RIBA Pension Solution?
The RIBA Pension solution (provided by Salvus Master Trust) has been created specifically to assist architectural practices through pensions auto enrolment.
The RIBA continues to undertake extensive due diligence in selecting its advisory partners, supported by our RIBA Business team to support all of our members.
The RIBA Pension solution is delivered at low cost to both employers and employees (annual management charge 0.44% which is significantly lower than the capped maximum charge of 0.75%), providing a well governed independent solution and proactive support at all levels.
Pension communication and advisory services can be provided by our recommended Independent Financial Advisers Moore Stephens Wealth Management to engage with employees.
Get in contact to find out how the RIBA Pension Solution can help fulfill your practice's auto-enrolment needs.