Boal & Co | Platinum Member News | Pension Scheme Oversight: Your Responsibilities as an Employer | Oct 2024

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07 October 2024

By offering a pension scheme, you are providing a valuable benefit to your employees while supporting retention, wellbeing, employee satisfaction and recruitment (as well as many more benefits which I won’t detail here!)

But to what extent should you, as an employer, get involved with the oversight of the pension scheme? This depends, to a certain extent, on the type of scheme you have chosen to provide.

If your scheme is an occupational pension scheme, you may be a Trustee, which comes with specific legal responsibilities regarding the governance of the scheme. However, if you have opted for a group personal pension plan (GPP), whereby all you do is deduct contributions from salary and pay them to your employees’ personal pensions on their behalf, you may not have thought much beyond your obligation to provide the monthly contributions.

Employer Responsibilities for a GPP

While there may not be a legal responsibility beyond handling the monthly transfers when it comes to a GPP, there is an argument for having a sound understanding of the governance and operation of the scheme, from both a moral and practical perspective. Ultimately, you are likely to be the first port of call when your employees have questions about the scheme and, with your employees’ best interests at heart, should therefore be fully loaded with the answers to the most frequently asked questions.

We suggest it is good practice for employers to know the answers to the following:

What are the investment options? Are they monitored and changed over time?

What can be taken from the GPP and when?
Is it worthwhile joining when close to retirement? / Is it worthwhile joining early in a career? (The answer to these questions is almost always 100% yes!)
How does the GPP relate to other pensions?
Can employees consolidate other pensions into the GPP?
Can employees pay extra contributions to the GPP if they wish? How and how much?
Does the GPP impact the state pension?
What does the annual pension statement mean?
If advice is required, who pays? And who provides it?

In addition to the above, more straightforward, questions, you may also be hit with more technical queries, such as what happens to their GPP if the employee stops working before retirement age through permanent ill health? And if the worst was to happen where will the accrued monies be paid and in what format? (And an endless number of other complex scenario-based questions!)

We are not saying you need to be pension experts – ultimately that’s what we are here for and we’re always happy to answer questions from an employer or employee. Equally, when it comes to advice being needed on the pension itself, transfers in and investments, a financial adviser should always be consulted. However, an understanding of the basics will enable you to support your employees in the best way possible.

As pension specialists, we look after the pensions of more than 1 in 20 adults on the Isle of Man. If you provide a company pension already, either with us or someone else, we are always happy to chat.

Register Now for Pensions Governance Conference 2024

If you are involved in the administration or running of a company/occupational pension scheme or GPP and haven’t already booked your place on our third annual Pensions Governance conference at the Comis on Thursday 7th November, reserve your place today.

Chamber members can benefit from an exclusive 20% discount by using this registration link: https://shorturl.at/lo5b2.

For information on the regulatory status of our companies, visit boalco.com/regulatory

Article Written by John Batty, Technical Sales Manager, Boal & Co