DIRECTOR
Ben is a company director who is very focused on improving employee wellbeing and engagement, particularly through the pay and reward schemes.
DIRECTOR
Ben is a company director who is very focused on improving employee wellbeing and engagement, particularly through the pay and reward schemes.
A big part of the company’s reward package is their pension. Ben will regularly request insight into how engaged employees are with their pension and check in on the latest legislation updates. He needs to make sure the pay and reward schemes maximise opportunities for employees and good governance is in place to minimise risk. What is good governance?
Good governance is the foundation of a well-run pension scheme and at its heart aims to ensure good retirement outcomes for employees. It can also be used to help build a long-term strategy that increases financial capability within the workforce and goes a long way to ensuring the scheme delivers good outcomes for employees.
What does Ben need to consider?
Ben will need to be confident that the pension scheme is offering value for money to all employees. He will need the correct tools in place to evidence how the employees are engaging with the pension scheme and receive regular updates on how the company is keeping up to date with pension legislation updates.
Why good governance matters
A pension is one of the most expensive benefits that your company can offer, and yet it’s so often under-appreciated. Far from being a box-ticking exercise, it is an opportunity to give your scheme a financial MOT and identify areas for improvement. The main purposes of governance are to:
- Ensure the scheme continues to provide value for money
- Maximise Opportunities - To make sure the scheme provides the best possible opportunity for employees to achieve a comfortable retirement
- Minimise Risk - To ensure that you remain compliant with relevant legislation, particularly auto-enrolment.
A well-governed pension scheme will have an engaged and motivated committee, who not only monitor investment performance but who are equipped with insightful data on the level of engagement and the decisions that employees are making. Your pension provider should use this data to support you in identifying and addressing issues with employee pension engagement. By helping you build an understanding of your employee's pension decisions, you can then work together on a strategy to target these areas of low engagement with specific communications. This results in a far greater return on investment for the company and turns what is essentially a company cost into a benefit tool that will help you recruit, retain and reward your employees.
What do you need to know?
It is very important to have a full view of how your pension scheme is currently being governed. You can speak with your current provider about how to receive this data on your employees and also make sure you will be updated regularly on any legislation changes. Your current provider should be communicating what their strategy is to improve your employee pension engagement and support with any specific requirements.
How your pension provider can help
Speak to your provider to review the current governance structure, covering the below areas;
- The level of engagement of your employees
- The contribution basis; to see if it gives your employees the best chance of a comfortable retirement
- Auto-enrolment procedure and literature
- Confirmation of which tasks are owned by each party; employer, provider or 3rd party (e.g., payroll)
- Communications to your employees; are these appropriate and based on demographic and current levels of engagement/understanding?
Legislation changes
The rules governing pensions and the obligations on employers frequently change. A strong governance framework ensures that both the scheme and the employees are well set to respond to these changes. Your pension provider should help support you in advising of any changes in pension legislation that may affect your employees. They can also help with advising what necessary actions will need to take.
Governance committee
Your personal pension scheme will provide additional governance through an Independent Governance Committee (IGC). This committee will constantly monitor the pension scheme and survey members and employers. They use this information to produce an annual report on the pension and make it available to you and all your employees.
Video Summary