Choose the right pension scheme

Considerations when choosing a pension scheme

When you choose a pension scheme, you need to consider issues such as:

• The level of funding you as an employer are prepared to give.
• What income you want your pension to deliver to your employees.
• Whether you want to be able to change your pension scheme easily. Generally you will not be able to do this retrospectively, so it's important to try to get it right first time.
• Whether there are areas in which you would like/not like your pension scheme to invest, for example in ethical investments.
• The charges, costs and penalties.
• The reputation of the pension provider, but remember that past performance is no indication of future returns.
• What happens to the pension benefits in the event of the death of a member.

The legislation and tax regulations that govern pension schemes are very complex. You may find it useful to consult an independent financial adviser (IFA) or pension adviser before you make a decision.

You can search for a pension adviser at the Society of Pension Consultants website.

Your situation, and that of your employees, will change all the time. It is a good idea to review their pension needs regularly and monitor the fund to make sure it is giving good returns.

If you have any complaints about the running of the overall scheme, the first point of contact is the compliance officer at your adviser's or provider's firm. If this does not resolve the problem, employers with money-purchase pension schemes or group personal and stakeholder schemes can contact the pensions regulator or the Pensions Advisory Service. The Pensions Ombudsman is the final arbiter of any problems.

Employers who run into problems with salary-related schemes should seek legal advice. You can find a solicitor at the Law Society Solicitors Online website.

Subjects covered in this guide

• Introduction
• Benefits of having a workplace-based pension scheme
• Choosing an occupational pension scheme
• Choosing a group personal pension
• Choosing a stakeholder pension scheme
• Approved pension schemes for directors and owners
• Unapproved pension schemes for directors and owners
• Comparison of pension schemes
• Organisations that advise on pensions schemes
• Considerations when choosing a pension scheme
• Here's how I selected the best company pension scheme for my business

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