Choosing a workplace pension is important but shouldn’t be hard work

Whether you’ve been a business adviser helping an employer or an employer choosing a workplace pension for your staff, you’ll know that it’s a daunting business.

At one level- it’s very simple; organisations like People’s Pension, Aviva and NEST allow you to set up a pension with a few clicks of a mouse.

At another – it’s hard; the choice will impact the financial future of workers who will be committing large parts of their salary for decades to come.

There is a real dilemma here and it’s not made easier by contradictory messages coming from Government. On the one hand, we are being told that no advisor or employer can be blamed for choosing NEST, on the other, we are presented with a bewildering list of choices on the Pension Regulator’s website.

NEST

For most of us, the starting point (and maybe the end point) of our search for a workplace pension is NEST. NEST was set up with a £600m loan from the DWP to provide a pension for every employer. It has a public service obligation and (so long as your organisation has a UK bank account) NEST will offer your organisation a right to participate in a workplace pension.

Not only is NEST backed by the Government, but it is currently free to employers to join. The cost of NEST to the tax-payer is- we estimate- around £450m and the National Audit Office has asked for a repayment plan from NEST so that the tax-payer gets the money back.

NEST is good for many employers, but the research conducted for Pension PlayPen by First Actuarial pension consultancies suggests that it only suits a proportion of the employers that use our service.

Other pensions

Our research suggests that over two thirds of the employers who use our service choose another pension than NEST.

There are many reasons why employers choose alternatives to NEST, some subjective and some objective. It is not for us to judge whether the decision is right or wrong, but every employer who uses www.pensionplaypen.com is asked to make a statement when they have made their choice as to why they chose as they did. It is interesting to see how diverse the answers that we record are.

Keeping a record of the decision

We can all remember the maths teachers telling us that we should show our working. Even if we got the maths wrong, if we could show how we got to the answer we did, we would get credit.

www.pensionplaypen.com helps employers to show the working that went into the choice of a workplace pension. Business Advisers can lead an employer to the water, but it’s the employer who must drink (e.g. choose and record why the decision was taken).

Choosing a workplace pension is important but it shouldn’t be hard work

The rules that drive the recommendations on Pension PlayPen have been created over a decade and the advice comes from the opinions of true experts.

But as important to us, is that the journey that employers take to making their choice is easy, pleasing on the eye- and even, occasionally, fun. That’s why we have the “Play” in our name. When Paul Lewis mentions the Pension PlayPen, he mentions “it’s a lot more serious than it sounds”.

There are two deadly serious themes to our work

1. We aim to improve the outcomes to the staff who contribute and benefit

2. We aim to reduce the risk to employers and advisers of getting the decision wrong.

Over the past forty years, pensions have been frequently miss-sold and miss-bought. This has been in part because the information to take a decent decision has been missing or wrong.

We are determined that as many employers staging auto-enrolment and choosing a workplace pensions, make an informed choice.

You can use www.pensionplaypen.com, choose a pension and download a full audit trail on your choice for £199 +vat.

Want to do more than read? Compare pension now »