3 Alternative Providers to NEST Workplace Pensions -autoenrolment
You should all have heard of autoenrolment by now. This is the name for the government sponsored work-place pension. This state scheme requires that employers enrol eligible workers into the work-place pension. As well as this, employers, along with the government, contribute to the pension in addition to the employee’s contribution.
Autoenrolment started back in 2012 as a means to help today’s workers save enough money for retirement. Larger employers were required to enrol first while smaller employers have been given more time to prepare and they still have until about 2018 to enrol. It’s estimated that 5 million workers are currently enrolled and this figure will rise to 9 million in 2018. If you haven’t done so already it’s time to start thinking about work-place pension providers.
When you think of workplace pension providers, you will most likely think of NEST. It is the state sponsored pensions savings scheme set up by the UK government. It’s free for employers to use and it’s also good value for employees. This would make it the obvious option for many employers, but it does come with drawbacks, and so it’s fortunate that since the introduction of NEST several other autoenrolment providers have entered the market, meaning you have plenty of alternatives to consider.
I have summarized the 3 main alternatives to NEST below.
The People’s Pension is an offering of B&CE, a company that has managed work-place pensions for over 30 years. Over 9,000 firms are in the B&CE scheme and it has assets of over £2.2 billion so there is plenty of pedigree here. Marriot UK, Wilkinson, Pret A Manger are some of the most high profile users of the People’s Pension.
The People’s pension is a not-for-profit, which has led to low charges: it comes with a simple, flat fee of 0.5% annual management charge which is less complicated to follow than NEST’s 0.3% per year plus a 1.8% contribution charge format. You can also transfer money from other pensions without penalty and this can’t be done with NEST until April 2017. There’s also no limit to annual contributions which compares favourably to NEST which allows no more than £4,900 to be paid into the pot each year. The People’s Pension has recently added a one of fee of £500 + VAT setup charge for employers.
Backed by Danish retirement specialists ATP – which incidentally has run the Danish National Pension for nearly half a century – and used by the likes of Randstad, Fitness First and Cineworld, NOW:Pensions is another robust alternative to NEST. In terms of its investment strategy, it has a savings phase and a pre-retirement phase. During the savings phase funds will be place into high growth but higher risk funds, and 15 years out from retirement individual pots will be moved into lower risk funds. It comes with 0.3% annual management fee along with a monthly admin fee of £1.50. It has a monthly employer service charge of £20 plus VAT per month.
This pension provider came to the market in 2014 and was set up by a group of experienced finance and technology professionals and is particularly focused on serving smaller firms. Employees enrolled on the scheme pay a monthly management fee of 0.75% per annum. They allow free transfers and they don’t have a cap on contributions. The investment process is simple. There is one fund called the Smart Pension Master Trust which is looked after by a team of independent professionals trustees. These trustees select the investment manager and they currently use Lewis Capital Management who invests in large blue funds like Legal and General.
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