How to identify the right scheme for your firm by Morten Nilsson, CEO NOW: Pensions.

1. How to choose the
best scheme for
your employees
Morten Nilsson
CEO | NOW: Pensions
Smarter. Simpler. Better.
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@nowpensions
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2. About us
• NOW: Pensions is a UK
multi-employer trust
What we offer
• Launched January 2012
and already servicing
600,000 + employees
• Parent company is ATP,
Denmark’s leading pension
provider
• ATP has £74bn FUM and 4.7
million members
• Low costs
• High quality
• Simple proposition
• Cater for all employers and
every type of employee
• A modular solution
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3. A responsibility to your employees
• Picking the right scheme for your employees is imperative
• They have no say or influence in the decision making process
• They are being passively enrolled
• You have their retirement fortunes in your hands
• It’s a big responsibility
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4. A responsibility to your firm
• Auto enrolment is complex – you need a provider who
will help to keep it as simple and hassle free as possible:
✓Handle assessment and opt-outs / opt-ins
(when your payroll doesn’t do this)
✓Handle all statutory communications
✓Interface seamlessly with payroll
• Robust proposition that won’t let you or your employees down
• Low cost to you and your employees
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5. What do
employees want?
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6. Smarter. Simpler. Better.
Smarter. Simpler. Better.
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7. Smarter. Simpler. Better.
Smarter. Simpler. Better.
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8. Smarter. Simpler. Better.
Smarter. Simpler. Better.
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9. Smarter. Simpler. Better.
Smarter. Simpler. Better.
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10. What does this research tell us?
• Pensions are rated highly as part of the overall
comp & bens package
• High employer contributions and certainty over
outcomes are top priorities
• Investment choice is a low priority
• Employees want to improve their pensions
knowledge and want their employer to help
them understand
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11. An obligation or an
opportunity?
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12. Compliance or something more?
• Basic compliance is the route currently favored
by most employers
• Give consideration to providing a package above the
minimum – it may not be as costly as you think
• Well communicated benefits improve employee
retention and productivity
• You can offer different provision to different
employee categories
• Employees want to be taken care of and guided in
complicated financial matters like pensions
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13. What does a
good scheme
look like?
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14. Value for money In pensions
On 16 January, the Pensions Institute at Cass Business School published a
report examining what value for money means in pension schemes.
The report surmised:
1.
A TER (total expense ratio) in the region of 0.5%
2.
A well-designed multi-asset default fund with a glide path that is subject to regular modelling
scrutiny
3.
Expert independent governance fully aligned with all members’ interests including both active
and deferred
4.
Effective member communications that focus on improving the outcome for members
5.
An efficient consolidation system that helps members to transfer older DC pots to the new
scheme
6.
A decumulation service that is part of the scheme and provided by a specialist
Source: “Value for money” Pensions institute report launched 16 January 2014. The report was co-sponsored by NOW: Pensions
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15. Charges do matter
Somebody who saves from age 22 to 68 based on
average salary and 8% contribution:
• Pay 1% AMC and lose 24% of total pension pot to charges
• Pay 0.75% AMC and lose 19% of total pension pot to charges
• Pay 0.50% AMC and lose 13% of total pension pot to charges
• Pay 0.3% AMC and £1.50 per month admin charge
(NOW: Pensions’ model) and 8% of the pot is lost to charges
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16. Help to identify a good scheme
Pension Quality Mark
• Set up in 2009 to recognise good DC pensions
• PQM Ltd not-for-profit and supported by NAPF
• Supported by Government, regulators, employer, industry & consumer groups
• 186 employers have ‘classic’ PQM for their scheme
PQM Ready
• Set up in Feb 2013 to recognise quality Master Trusts
• NOW: Pensions was the first master trust to attain PQM READY status
• Standards on comms, governance and charges
• 6 Master Trusts have gained PQM READY
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17. Summary
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18. Securing the right scheme
• 2014 is going to be busy - 30,000 companies staging over a four
month period in mid-2014
• Plan ahead and don’t make any assumptions – the market is
shifting - don’t assume your existing providers will be suitable or
willing to accept your entire workforce
• AE doesn’t have to be a trade off between good value for employer
and good value for employees
• Keep it simple – complexity adds cost but delivers little extra value
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19. Don’t assume the legislation will remain static
• Pensions Minister keen to introduce “pot follows member” for AE
• A cap on workplace pension charges likely – but perhaps not soon
• The government might increase minimum contributions – there is
widespread consensus that 8% contribution won’t be enough to
ensure a comfortable retirement
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