Auto Enrolment regulations for pension schemes.
If you already have a pension scheme in place then you might be able to continue using it for existing members. If you want to use it to automatically enrol all eligible jobholders then you have to make sure the scheme meets those legal requirements.
If it does not meet the criteria, it may be possible to change the terms of the pension policy but you will need to contact your pension provider to confirm this.
If the policy conditions cannot be changed then you will have to choose a new pension scheme.
There are two types of “Money Purchase” schemes you can choose from for Automatic Enrolment. They are:
A master trust is a trust-based pension for a multitude of employers.
It is open to the employees of many employers, the staff of which are all treated equally and follow the same rules. Professional trustees are appointed as sole trustee of the scheme, who will then appoint investment advisers and administrators.
Master trusts have been the structure of choice for auto-enrolment pensions ever since NEST, the government-backed scheme, was launched. NEST is a master trust governed by a board of independent trustees.
Group personal pension
A group personal pension scheme on the other hand is a contract-based arrangement as opposed to a trust. The employer appoints a pension provider (normally an insurance company) to run the scheme. There is then a contract between the provider and the employer and the pension provider makes all the decisions about how the scheme is run.
For Automatic Enrolment the employer must make pension contributions to the scheme.
Your pension scheme provider is legally bound to run your pension scheme correctly and in line with current tax legislation. Therefore the pension scheme provider needs to be knowledgeable and competent.
Investment managers who manage the pension schemes’ assets are regulated by the Financial Conduct Authority.
Once the pension scheme has been established then the scheme provider should communicate directly with you and the pension members confirming the value of the pension plan, contributions received, how the investments have performed and provide a projection of fund value at retirement.
This information is crucial because the pension scheme members can determine whether they are saving enough or not. It also allows individuals to make decisions about increasing contributions or consider new investments.