UKSPA Directory 2017 2017-18 - Page 21

C o m m u n i cat e w e l l C h o o s e a p l a n t h at lets you focus on your business There are many questions to consider when thinking about your DC scheme; Who is doing the administration? Who is doing the governance? How effective are the communications? And how well are members supported at retirement? But as the DC landscape becomes ever more complex, our experience is that more and more employers want to focus on their own core business, and outsource responsibility for pensions to providers with the necessary expertise. Administration requires a lot of attention, as members notice quickly if things are going wrong. Choosing a provider solely on price, without checking how well it has historically administered pensions, is a big risk. What governance structure is best? While there are a lot of well-run individual pension schemes, these come at a cost and are increasingly burdened by regulation, resulting in the need to pay for legal and investment advisers. At the same time, the Pensions Regulator wants to see fewer, better-run pension schemes and so we’ve seen a trend of employers choosing to move away from running their own plan into participating in a Master Trust. The best measure of a return on investment in pensions for an employer is how much employees understand and value their pension scheme. This requires effective and increasingly sophisticated communications, created by experienced and knowledgeable specialists. The employer can play a huge role here, as research shows individuals trust their employer more than they trust financial institutions. Auto- enrolment means that people do now join the pension plan, so employers’ communications must focus on engaging members to contribute enough on a regular basis and on the complex decisions faced at retirement. All of this comes at a significant cost, which only really makes sense if you have sufficient scale and can spread these costs across many schemes. Outsourcing communication and engagement to a provider with the scale and resources to manage and invest in future technology, tools and techniques has become very attractive to businesses of all sizes. There is also a need for advice, both at retirement and during retirement, as the decisions people must make are now much more complex. Although high net-worth individuals may have their own advisers, we now have a mass market that will need advice but won’t find it easy to access, and won’t want to pay much for it. Finding a way to provide this advice will be another key responsibility for schemes in the future. Growth or exit? In DC, once the member has left employment, employers expect their liability to end and don’t want to continue their fiduciary obligations into retirement. So it makes sound business sense to outsource all of these post-retirement obligations and administration duties to a provider and a pension solution, such as a Master Trust, with the financial strength to deliver low-cost advice and full pension freedoms. With many of the UKSPA’s businesses owned by private equity firms, owners and management should be considering whether their pension plans will support their future strategy for the business. Purchasers will undertake pensions due diligence, so being able to offer pension plans that have high levels of governance and security of members’ savings, no residual liabilities and no increases in member charges will help to enable a clean exit for owners. A pension plan that can be easily harmonised with the new owner’s arrangements will be doubly welcome, and may indeed offer a better solution for the new owner. Where the strategy is to continue growing the business, again the pension plan must offer flexibility to adapt to higher memberships, more diverse demographics and more demanding individuals. ]Ё܁ЁЁѥ)ٔЁхеÊḛ́ѡ)ЁݡѡɭЁ́)ѡЁЁȁٕ́ՙ)᥉䁙ȁѡȁѡͥ́ȁ)啕̸)ٕɥͥ́ѡɽ՝)5ѕȁQЁٕ́Ё)ɥمєե䁽ݹ́᥉Ѽ)ѡȁѥՔɽݥѡȁͥ)ȁѼЁͅݥѡЁ٥Ѽ)ݽ䁅Ё̸ͥ)Uаѡɔ́ЁЁѼݥ)ݥѠ́eЁՙ)ɽɕ͕ɝ́ѕȁ٥)ѡȁɕѥɕЁͅ٥́ѥՔѼ)ٕɹɽͥѕ̸)Յ䰁ѡͥ́ѥՕ́Ѽ)ɽܰЁ͕)ѡЁѥٔɅѡȁѡչ)ȁٕɹͥЁݥѠ)ЁѡЁѡ䁅ɔͥѥ͔)ٕɹٕѵаɅѥ)ȁչѥ̸)ٔɔ)́ԁ́фЁ) ͥ ѡЁ́Ѽɭ)̰ѼɕձѥѼͥ)́́Ս䁥хи%Ё)ͥͥɽ٥ȁѡЁ)ѕѼѡU,ɭЁȁѡ)ѕɴѡЁ́ѼѹȁݥѠ)͕ͥ́ѡɽ՝Ёѡȁ危̸)Ё0ݔٕȁمɥ䁽 )ͥͽѥ́Ѽ͕ѽ́U,)Ѽͥ锁̸ͥZ()5ɭЁ%ѕU,) ɥѥ1役ѡͥٔ)ɽLM)ͽ