Better Workplace Pensions - we're here to help
On the 6th April 2015, the Government introduced additional requirements for workplace pensions.
The following are key responsibilities for employers and/or trustees of pension plans:
- Create a default investment arrangement which is in the members' best interests and keep this under review.
- Ensure essential financial transactions are managed accurately and on time.
- Assess the value of a plan in terms of costs and charges to members.
- Have a board of trustees. For contract-based plans, this means the pensions provider must have an Independent Governance Committee (IGC), or a Governance Advisory Arrangement (GAA) for smaller schemes.
- Also, to ensure that trustees have freedom to switch pension provider where it is in members' interests.
If you're unclear about any of the terms used, please see our Jargon Buster.
There are other requirements for defined contribution plans:
All qualifying pension plans must have a default arrangement (fund or lifestyle option) where the total charges paid by the members, excluding transaction costs, do not exceed 0.75% per year. This is commonly referred to as the 'charge cap'. 'Add on services'. Individual members are still, however, able to choose an alternative investment strategy and add on services. The charges for these may be greater than the charge cap.
Independent Governance Committee
For members of contract based qualifying plans, an Independent Governance Committee (IGC) has been introduced to ensure plans offer value for money for members. The new requirements for contract based plans also apply to trustees of trust-based plans.
Removal of commission
Between April 2015 and April 2016, commission may only continue to be paid in respect of a pension scheme if this does not result in charges exceeding the charge cap. This requirement applies only to qualifying plans.
Active member discounts
Between April 2015 and April 2016, discounts for contributing members may continue within a qualifying plan, provided this does not result in charges exceeding the charge cap.
Active member discounts
Active member discounts are banned within qualifying pension plans. It is prohibited to offer a charging structure that favours contributing members compared to non-contributing members.
Removal of commission
Commission payments to advisers for qualifying pension plans must stop. It is, however, possible for the employer to pay directly for financial advice.
Greater transparency of costs and charges. The Department of Work and Pensions and the Financial Conduct Authority are working on the details and we will update this page when additional information is available.
We're here to help
One of your first considerations is whether your existing pension plan can be adapted to make it suitable for automatic enrolment, or qualifying purposes, or if you need to set up a new plan or plans to meet the requirements.
Depending upon the circumstances, we may be able to offer an automatic enrolment plan, or make an existing plan qualifying for some of our existing corporate clients.
It's really important you contact us as soon as you know your staging date, so we can discuss how to support you through this process. Please tell us how you intend to proceed at least six months before your staging date.
How do I know if my plan can be used for automatic enrolment?
Not all of our plans may be use for automatic enrolment purposes. If your current plan is administered on our Hartlink platform it is likely that we can support automatic enrolment. However, there may still be some restrictions.
Plans that are not administered on Hartlink cannot be used for automatic enrolment, but may still be suitable as a qualifying pension plan.
You can contact us using your usual administration contact details to find out if your plan can be used for automatic enrolment or qualification purposes.
If I can't use my Prudential plan for automatic enrolment, what does this mean for existing members?
Even if you do not use your plan for automatic enrolment purposes, contributions can continue for members of your existing plan, provided it meets the qualifying criteria.
To check whether your current plan might meet the qualifying criteria, visit The Pension Regulator's website and use their online tool.
Please also contact us to discuss your requirements as we may not be able to offer your plan qualification status.
Make an enquiry using our secure online mailing service.