Choose the right pension scheme
Here's how I selected the best company pension scheme for my business
The Cheshire and Warrington Tourist Board was created as a Company
Limited by Guarantee, a non-profit business, with assistance from
the North West Development Agency in 2004. Rob Hezel's role as finance
and administration director included researching and putting in
place a company pension scheme from scratch.
What I did
Define requirements
"The business grew quickly in the first year and we soon had
five employees, which is the level at which a company is legally
obliged to provide a stakeholder pension scheme. On top of the legal
requirement, we also wanted to create a genuine staff benefit that
would help to attract and retain employees.
"Using the Internet, we researched alternative products and
providers. We decided on a stakeholder scheme based on the size
of the business, flexibility and ease of administration. We also
had to consider how much money the company was prepared to contribute
to the scheme."
Get advice
"There are various off-the-shelf schemes available, all with
subtle differences. We took our basic list of requirements to several
pension providers and talked to their in-house pension advisers
about stakeholder schemes and how suitable they were for our needs.
We also wanted to know more about the tax advantages on offer.
"When you're starting from scratch, it can be confusing, so
it's important to choose someone you trust. We chose HSBC, not just
because it's a credible brand, but because we were impressed by
our local branch's pension adviser. She was able to explain things
in plain English and also came to the premises to give an informative
talk to all our staff."
Choose a scheme
"The stakeholder scheme we chose for our business gave us the
flexibility to adapt arrangements for individual employees. For
example, employees can choose what percentage of their salary to
pay in and the figure can be adjusted if personal circumstances
change. The scheme also allows employees to pick particular funds
they want to invest in, and switch funds during the life of the
pension.
"The scheme is very easy to administer. Employees can choose
to contribute via the payroll - a requirement of all stakeholder
schemes - and we pay the provider by direct debit from the company
account each month. All other administration is handled by HSBC."
What I'd do differently
Conduct more research
"We're very happy with our pension provider, but if we did
it again I'd do even more research into how the various funds on
offer are administered to minimise issues for us and our employees."
Don't waste time comparing costs
"We started out thinking that providers' management charges
would vary considerably, because pension provision is such a competitive
market. In fact, stakeholder providers are only allowed to charge
a fixed maximum percentage, so there's very little cost variation
on which to base a decision."
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