Arguably one of the most important benefits you will provide your employees is a workplace pension so it is crucial you have the right pension scheme in place for them. The choices you make will have a significant impact on their long term financial well being and we are here to guide you through the entire process.
Ellis Bates have over 4 decades of experience in successfully delivering defined contribution workplace pensions, offering you the employer a wide range of choice and flexibility, whether its setting up a new scheme or reviewing and replacing your existing scheme.
Why it is important to review your current workplace pension
Regular reviews are imperative, as fees, benefits and enhancements can change markedly over time and as independent pension advisers we can search the whole marketplace to ensure you and your employees maximise pension investments.
Limited access to information, coupled with a lack of transparency from some pension providers often makes it difficult for employers to make a well informed decision about the most appropriate type of pension scheme to offer their employees, which can impact an individual’s savings and retirement.
Master Trust Schemes
A master trust scheme, also known simply as a master trust, is a type of pension scheme that provides retirement benefits to employees or members of multiple, unrelated employers. It is a form of occupational pension scheme that allows multiple employers to pool their pension assets and administration resources within a single trust structure. This structure can offer certain advantages, such as cost savings, improved governance, and potentially more efficient investment management.
Examples of master trusts are auto enrolment schemes such as NEST and People’s Pension, which historically offered a quick, off-the-shelf option to ensure companies could comply to the Government’s auto enrolment requirements when introduced in 2012.
These standard schemes not only belong to a master trust but are also referred to as ‘fixed’ schemes as they ‘fix’ an employees retirement age and then typically adopt a ‘Lifestyling’ investment strategy as their default.
With Life-styling, as employees approach their retirement age, pension savings are gradually and automatically moved from ‘higher risk’ assets such as global and UK equities into ‘lower risk’ asset classes such as fixed interest and cash.
Legislation changes
Pensions Freedoms 2015
The Government then introduced the Pensions Freedoms in 2015, to allow much greater flexibility in both managing and accessing defined contribution pension pots. Initially, these freedoms came into force for pension savers from the age of 55, but from April 2028, this will rise to 57. The legislation brought in much greater flexibility and choice for individuals and employers, particularly with regards to accumulation and decumulation.
Accumulation and decumulation are terms often used in the context of retirement savings and pension plans. They refer to the stages of building up retirement savings (accumulation) and then using those savings to generate retirement income (decumulation). Flexibility in these stages was seen as important to cater to individuals’ varying financial needs and preferences.
Flexibilities in Accumulation
Contribution Levels: individuals should have the flexibility to contribute varying amounts to their retirement savings based on their financial situation, goals, and age. Some pension plans allow members to adjust their contribution levels periodically.
Investment Options: providing a range of investment options allows savers to tailor their portfolios to their risk tolerance and investment preferences. Flexibility in investment choices can help them align their portfolio with their retirement goals.