Switching work pension schemes

maxaxe

I work for a small company that uses a relief at source pension scheme with NEST. The company offers the auto enrolment minimum and I contribute the minimum to get the employer's match to the scheme. I would like to contribute more, but am put off by the charge to put money into NEST and the fund choices.

I have managed to persuade the company to agree to set up a new salary sacrifice scheme. But I need to propose a provider and it needs to be cost neutral for the company. I don't think cost neutrality is too big an issue because salary sacrifice should save the company on national insurance.

The providers on the government website that take small companies all seem to be expensive or have transfer out fees etc. and don't show their funds options.

Any recommendations on a provider? Ideally, I'd like someone who:

• Charges <0.3%ish for a global (or choices of other) equity index trackers or something similar
• No fees to add in money or transfer out
• Works with small companies
• Decent customer service would be nice
• Anything else to bear in mind? Not too fussed about withdrawal options for now if we can transfer out.

Thanks

Albermarle

The providers on the government website that take small companies all seem to be expensive or have transfer out fees etc. and don't show their funds options

What about the other 'auto enrolment' type providers, like Peoples Pension for example?

maxaxe

https://forums.moneysavingexpert.com/discussion/comment/82067512#Comment_82067512

They seem to have a management charge on 0.5% plus a flat fee. I hope there are there better ones in the market? Do big companies like L&G do this kind of thing?

Marcon

Presumably this is going to be instead of NEST and not in addition to it, so needs to comply with auto-enrolment requirements.

How small is 'small' in terms of number of employees? Some of the major players will only accept businesses which have a certain minimum (eg Aviva expects a minimum of 10).

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82067614#Comment_82067614

Costs and charges explained - now:pensions

dunstonh

I have managed to persuade the company to agree to set up a new salary sacrifice scheme. But I need to propose a provider and it needs to be cost neutral for the company. I don't think cost neutrality is too big an issue because salary sacrifice should save the company on national insurance.

It's unlikely to be cost neutral for the company. Nest is one of the few providers that doesn't charge the employer.

Do big companies like L&G do this kind of thing?

They do. However, they target larger companies or those with a larger amount of contribution and/or existing money to transfer over.

maxaxe

https://forums.moneysavingexpert.com/discussion/comment/82067746#Comment_82067746

It will be cost neutral (or better) for the company because of the savings from NI paid by the employer when switching to a salary sacrifice scheme.

Any specific recommendations for a larger company that does this? In general, their fees seem lower and have more options for funds.

maxaxe

This would be optional for employees in case they prefer NEST and would my company would have both NEST and a new provider. It would need to be auto enrolment compliant.

For reference, the company is about 15 FTE, so if 10 is a threshold, then maybe I can just look at big providers.

maxaxe

Thanks for this, it looks like it checks my requirements. Their global equity funds still looks expensive compared to other global funds I can get from a SIPP, but I guess they need to make their money somehow.

https://forums.moneysavingexpert.com/discussion/comment/82067693#Comment_82067693

I will look at bigger providers and see if anyone else can suggest a provider better than now:pension

hugheskevi

The universal pension providers are NEST, Now, and People's Pension. Of the rest. Legal and General has a very widespread automatic enrolment coverage despite not being universal.

I'd make sure your employer is fully aware of what they are getting into with this. 15 FTE is very small to be having multiple pension providers, and introducing salary sacrifice means they will need to adjust to the new salary sacrifice rules from 2029 as well as introducing things like checks against minimum wage compliance. For a very small company, these things can be difficult.

The savings for the employer operating statutory minimum are going to be small, probably something like £150 per employee per year, so maybe a bit over £2,000 per year across all 15. That is very little if it comes with additional admin complexity.

In their position, I would not be entertaining running a dual-provider set-up for only 15 staff, and probably would introduce changes that are already compliant with 2029 salary sacrifice changes, or at least know exactly what I will be doing when they are introduced. For example, as part of the next pay review they could move to a non-contributory scheme to avoid the phaff of salary sacrifice entirely (and choose to either not permit salary sacrifice at all, permit it up to £2,000 or permit it to minimum wage with a £2,000 restriction introduced from 2029).

Marcon

https://forums.moneysavingexpert.com/discussion/comment/82068685#Comment_82068685

You've done a great job convincing your employer that a salary sacrifice arrangement with a provider other than NEST would be worth a go.

It would be unwise in the extreme for a small employer to offer two pension schemes - your employer would be asking for trouble, or at the very least a whole load of queries about which is better, can I switch etc etc. What might be cost neutral in cash terms will be anything but neutral in management time.

Your payroll provider probably isn't going to be too happy - and the chances of mistakes are hugely increased.

Such an approach would also make you much less attractive to an insurer as a potential client. You'd be an even smaller target pool of contributors, and the insurer would be well aware of the queries which would be likely to come their way when employees are confused about which scheme they are in/what their options are.