2021 – a good year for businesses to review their pension arrangements
2020 will take its place in history as a year like no other. The COVID-19 crisis has been unprecedented in its complexity and severity. The pandemic has triggered the deepest economic recession in nearly a century and reached almost every country in the world, threatening health, disrupting economic activity, and hurting well-being and jobs.
Many businesses have faced temporary economic shutdown, driven both by pandemic and health policies, or as a consequence of the sudden collapse in demand or severe constraints on supply. SMEs have been particularly vulnerable due to their relatively low cash buffers or limited access to credit, but they also represent a sizeable share of employment and output.
For all businesses cash flow has been critical and a large focus will have been placed on decreasing debts, collecting fees and payments and reducing costs. Some of these measures may have been short term to navigate the most difficult period, but it is likely that some of the practices adopted will be implemented longer term, if not indefinitely.
One of the less obvious areas of focus when considering reducing ongoing costs are the fees and charges associated with a company pension plan (if one is provided), particularly because many of these arrangements may be several years old and costs may no longer be proportionate to today’s more mature and competitive marketplace.
The difference in fees and charges between providers can be significant, particularly for plans that were established more than three years ago. New entrants and smaller providers in this market have also invested heavily in this area, using disruptive technologies to deliver systems that are focussed on transparency and customer outcomes.
So for any business that provides its workforce with access to a company pension plan, it is worth conducting a formal provider review and selection process to assess whether the arrangement you have is providing value for money. The chances are that you may be paying a premium price and not necessarily receiving best value.
A review could lead to a reduction in costs and could also identify a provider with better systems and support, resulting in improved service for a reduced cost – the perfect outcome. And should you wish to change your pension provider, this can generally be achieved within a relatively short timeframe of two to four months.
Sovereign provides local occupational pension solutions for employers in Guernsey, Gibraltar, the Isle of Man and Malta, but can also provide international pension plans (IPPs) and international savings plans (ISPs) from Guernsey and the Isle of Man. All our occupational pensions business is delivered via a state-of-the-art administration system that provides employers and employees with a user-friendly online self-service portal.
If you would like to hear more about what Sovereign can provide in this area, or if you have an existing scheme and you would like to see whether you would benefit from changing provider, please contact Sean Gillease.