Ever-changing legislation surrounding workplace workplace pensions around the world means that effective governance has never been more necessary for employers to ensure that their schemes are compliant and managed correctly.
But getting it right is not simply about ensuring that employees are categorised correctly. It is also about checking the schemes themselves to make certain they are set up right and their funds are performing.
One way of doing this is to hold regular governance meetings, at which key stakeholders can review the fundamentals of such schemes, enabling them to spot any problems and opportunities more swiftly. Potential problems range from a lack of compliance and underperformance to low levels of employee engagement and high numbers of opt-outs.
The idea behind governance meetings is to catch mistakes early and ensure that not only is your workplace pension plan delivering the best possible value, but also that you avoid the risk of future legal problems. To this end, there are five key pillars to good governance that are worth bearing in mind: value, risk, reward, compliance and monitoring.
So how can employers ensure they get the most out of their governance meetings?
One of the first steps is to ensure the right people attend. It is important to have a good mixture of staff representatives from all levels of the business, including HR, to ensure that both the meetings themselves and any subsequent action points are taken seriously and have broad employee buy-in. Encouraging personnel from across the organisation to attend also means they are more likely to feel part of the decision-making process and be prepared to take ownership, not least by cascading relevant information down throughout the company.
During the meeting itself, meanwhile, it can help to work from a checklist to ensure that all the salient points are covered. These include:
Pension performance: How is the scheme doing? Do not just look at the bottom-line figures – consider whether the company is achieving value for money and benchmark performance against other retirement plans. Most importantly, consider whether scheme members will have the savings they require to enjoy the lifestyle they want on retirement.
Quality: How much are employer contributions? How is the scheme structured? Again, benchmark what the company offers against government minimums and what other employers in the same sector are offering. If you want to use your pension plan as a means of attracting and retaining staff, do not fall behind with employer contributions or let its structure become outdated.
Market trends: Have there been any changes to workplace pension legislation that you need to be aware of ? Remember it is vital to stay up to date on all new regulations to avoid getting caught out.
Demographics: How well are employees engaging with the pension scheme? How many are opting in or out? By understanding this data, it will be possible to see how valuable employees consider their workplace plan to be and whether you are getting value for money from the investment.
Communications: Do employees receive enough relevant and useful information about their pension scheme? Employers often go to great lengths to produce pertinent information but subsequently fail to tell employees about it, which means that it might as well have not been written in the first place.
Action plan: All good governance meetings should end with an action plan, that is concrete next steps, to deal with any areas of concern. Progress in addressing these areas should be discussed at the start of the next meeting in order to understand which tasks still need to be done and which have been completed.
While pension governance meetings will not guarantee that mistakes never take place, they will make it more likely that they are caught at an early stage – and that has to be worth it.
“It is important to have a good mixture of staff representatives from all levels of the business.”
Steve Butler is the chief executive of Punter Southall Aspire, which has just released a new ebook entitled ‘The Ultimate Guide to Good Governance’. Over the course of his 25-year career, he has led a number of change management projects and new business start-ups, which include expanding Punter Southall Investment Consulting.
Ever-changing legislation surrounding workplace workplace pensions around the world means that effective governance has never been more necessary for employers to ensure that their schemes are compliant and managed correctly.
But getting it right is not simply about ensuring that employees are categorised correctly. It is also about checking the schemes themselves to make certain they are set up right and their funds are performing.
One way of doing this is to hold regular governance meetings, at which key stakeholders can review the fundamentals of such schemes, enabling them to spot any problems and opportunities more swiftly. Potential problems range from a lack of compliance and underperformance to low levels of employee engagement and high numbers of opt-outs.
The idea behind governance meetings is to catch mistakes early and ensure that not only is your workplace pension plan delivering the best possible value, but also that you avoid the risk of future legal problems. To this end, there are five key pillars to good governance that are worth bearing in mind: value, risk, reward, compliance and monitoring.
So how can employers ensure they get the most out of their governance meetings?
One of the first steps is to ensure the right people attend. It is important to have a good mixture of staff representatives from all levels of the business, including HR, to ensure that both the meetings themselves and any subsequent action points are taken seriously and have broad employee buy-in. Encouraging personnel from across the organisation to attend also means they are more likely to feel part of the decision-making process and be prepared to take ownership, not least by cascading relevant information down throughout the company.
During the meeting itself, meanwhile, it can help to work from a checklist to ensure that all the salient points are covered. These include:
Pension performance: How is the scheme doing? Do not just look at the bottom-line figures – consider whether the company is achieving value for money and benchmark performance against other retirement plans. Most importantly, consider whether scheme members will have the savings they require to enjoy the lifestyle they want on retirement.
Quality: How much are employer contributions? How is the scheme structured? Again, benchmark what the company offers against government minimums and what other employers in the same sector are offering. If you want to use your pension plan as a means of attracting and retaining staff, do not fall behind with employer contributions or let its structure become outdated.
Market trends: Have there been any changes to workplace pension legislation that you need to be aware of ? Remember it is vital to stay up to date on all new regulations to avoid getting caught out.
Demographics: How well are employees engaging with the pension scheme? How many are opting in or out? By understanding this data, it will be possible to see how valuable employees consider their workplace plan to be and whether you are getting value for money from the investment.
Communications: Do employees receive enough relevant and useful information about their pension scheme? Employers often go to great lengths to produce pertinent information but subsequently fail to tell employees about it, which means that it might as well have not been written in the first place.
Action plan: All good governance meetings should end with an action plan, that is concrete next steps, to deal with any areas of concern. Progress in addressing these areas should be discussed at the start of the next meeting in order to understand which tasks still need to be done and which have been completed.
While pension governance meetings will not guarantee that mistakes never take place, they will make it more likely that they are caught at an early stage – and that has to be worth it.
“It is important to have a good mixture of staff representatives from all levels of the business.”
Steve Butler is the chief executive of Punter Southall Aspire, which has just released a new ebook entitled ‘The Ultimate Guide to Good Governance’. Over the course of his 25-year career, he has led a number of change management projects and new business start-ups, which include expanding Punter Southall Investment Consulting.
