Auto-enrolment - Choosing a pension scheme

  • by Carole Jordan
  • 18 Jan, 2016
Workie auto enrolment mascot reminding small business to choose a workplace pension scheme
This is the second in my series of blogs to help small employers get a grip on the new workplace pension rules. Why not check out my  my previous blogs on this subject.

An employer has a responsibility when choosing a pension scheme to choose the correct pension for their workforce. This is where some time for thought is essential. The Pensions Regulator suggest 6 months. With our help it won’t take that long but it is important to have time for deliberation.

When choosing, its important to remember the organisation you choose has direct contact with your employees like any other pension provider.

Before you start, check with your payroll bureau or software provider to see which pension schemes they are compatible with. More on this in my next blog.

The best way of choosing a pension

Using an  Independent Financial Advisor. They can talk you through the options, the pros and cons of each provider and help you choose in a well informed way. They will also help you through the communications and administration required. This will give you comfort that you have a complete understanding of what you are buying. Naturally this comes with a fee attached. BusinessHeads clients will have access to our IFA whom we’ve worked with for some years.

Other options when choosing a pension include:

NEST  – This is the government’s pension provider and available to all employers and is free to set up. As with all pensions, there are charges taken from the employees’ pot but they are the minimum to cover costs. The default funds available are categorised by retirement age with investments in line with those timescales. There are also funds for employees with specific requirements to match their risk profile or beliefs.

A number of pension companies have set up pensions which meet the requirements set out by the government for auto-enrolment. You can find information about who these are on  The Pension Regulators  site.

When choosing a pension you should consider the following:

• Is this a net pay scheme or is there tax at source? This is to cover your staff who are paid below the annual personal tax allowance and would not receive tax relief with a net pay scheme.
• What are the charges? Many pension providers are levying high fees to cover the relatively high administration costs for the number of small contributions.
• What funds are available and do they suit your staff needs?
• Are their administration procedures compatible with your payroll software? (more about systems in my next blog)
• Will their systems will work out who needs to be in the scheme?
• Will they will write to your staff about the scheme? (more about this later too)

FSB Workplace Pension  – The Federation of Small Businesses did extensive research to pull together their solution to this challenge and provide help and support alongside a Legal & General pension scheme. There are fees but they are reasonable and communications and calculations are all included.

How you tackle the task of choosing a pension scheme for your staff depends very much on your resources and your concerns about the ongoing situation for you and your staff. Some business owners will feel comfortable doing serious research before deciding, many, I suspect will plump for  NEST . The FSB offers something in between but at a small cost.

This can seem rather daunting at first but don’t put it off. Contact your trusted advisor to get the ball rolling and get their perspective on your situation, alternatively you can contact me via email at:

All details above were correct at the time of publishing - for more up to date information please get in touch .

You might also be interested in...

If you enjoyed the blog, why not leave us a comment, or share it with a friend...

Free advice delivered to your inbox

Browse our other blog posts...

Our latest blog

by Carole Jordan 20 Nov, 2017

In response to a request from one of our readers I’m going to address losses, which occur in a business on a regular basis for a variety of reasons.

by Carole Jordan 13 Nov, 2017

There are proposals to reduce the VAT registration limit to capture more small businesses and increase tax revenue. 55% of small businesses are below the VAT threshold. Find out how you could be effected.

by Carole Jordan 06 Nov, 2017
It's time for the final part of our business story blog series! This week we're talking about what the equity on your balance sheet means for your business.
by Carole Jordan 30 Oct, 2017

Time for part 3 of your business story blog series! This time we'll be talking about the result of your profit and loss account - the balance sheet!

by Carole Jordan 23 Oct, 2017

This is a series of blogs to help you understand and analyse your business by understanding your accounts better. This week we're talking overheads and what your net profit figure means.

More posts
Share by: