Group Plan or Workplace Pension - difference?

JillyC8

I have a DC pension at work with Aviva (a group plan) the newer staff members are with a different pension plan (workplace scheme).

I assumed that with the new ruling on contributions increasing to 5% that mine would too, but I've received a letter saying that I need to instruct the company to increase my contributions if I want to.

The company aren't particularly generous with their contribution but I have discovered that those of us who are with Aviva receive an extra 1% contribution from the company than those in the newer plan, which seems strange.

Does anyone know the difference between them other than the group plan is not hosted as such by the company?

Marcon

Both schemes are 'workplace pensions' - sounds as if you are in a group personal pension with Aviva and newer employees are possibly in NEST, Peoples Pension or similar?

The only person who can answer 'what's the difference?' is your employer. My guess would be that they are using the newer scheme as a means of not paying the extra 1% you receive.

JillyC8

I contacted accounts and was told the Aviva one isn't a workplace pension, and the newer one with NOW is. I thought there might be some difference between them.

jamesd

Both are workplace pensions but the contribution rules can be different. Likely worse for the new one. Be glad you're in the group plan, which will also offer you a better range of investments to use.

The auto-enrolment rules that compel companies to enrol all employees typically leads to more employees using the pension. Not paying the 1% offsets the extra cost a bit.

JillyC8

Seems pretty unfair ... I'm not sure why there aren't complaints about it. But as you say, I should be happy I'm in the older plan.

Paul_Herring

JillyC8 wrote: »

Seems pretty unfair ... I'm not sure why there aren't complaints about it. But as you say, I should be happy I'm in the older plan.

Since the government has mandated an absolute minimum for contributions, some of those companies with more generous schemes have decided to rush for the bottom and drop their contributions to that level.

Your company seems to have gone 'halfway-house' and only put new starters in the minimum-required-scheme, while keeping existing employees with the previous (slightly) more generous scheme.

Albermarle

Could also be that previously only certain employees had the benefit of being in a pension scheme ( the aviva one ) When auto enrolment started , employers were forced to include all employees ( almost ) and at that point they also decided to change the workplace pension provider . Most probably NOW did not even exist when the aviva scheme was set up.

JillyC8

I remember receiving a letter a few years ago asking if I wanted to move to the new scheme but that if I did I couldn’t rejoin the old ... glad I didn’t move.