Ward Goodman, the Dorset based firm of Chartered Accountants and Independent Financial Advisers, has issued key advice on Workplace Pension Schemes following recent articles in the press which highlighted a stark contrast in performance of the best and worst auto-enrolment schemes.
Chris Peters, Financial Planner at Ward Goodman, explains:“Every workplace pension must have a default fund, and the government has set a maximum charge of 0.75% of your fund each year. This charge cap applies only to the default fund in workplace pensions into which employees are automatically enrolled. As well as the default fund, workplace pensions usually provide a range of other funds into which you can invest your savings, but these may be more expensive than the default fund.
“I have seen vast differences in the performance of these funds which seriously questions what represents ‘good value for money,’ with employers wanting to control costs, but also offer their employees a pension that performs well.
“Ward Goodman recommends that your workplace pension scheme is reviewed on a regular basis. This is often known as a Governance Review, and is backed up by The Pensions Regulator who recommend that a scheme is reviewed periodically.
“This is particularly important with the recent increase in contribution levels which many employers went through in April 2018, bringing the minimum contribution for many schemes up from a total of 2%, to 5%. The next increase is due to happen in April 2019, when the minimum contribution will be 8%.
“A Governance Review can help to highlight how your workplace pension is doing, how the funds perform, the Governance structure of the default fund, the charges that are applied and ultimately if it remains ‘fit for purpose.’”
A report on best and worst auto-enrolment pensions revealed can be read here: https://www.ftadviser.com/pensions/2018/04/25/best-and-worst-auto-enrolment-pensions-revealed/
For more information on how Ward Goodman can assist you, contact 01202 875 900 or email Christopher.Peters@wardgoodman.co.uk