Employers can increase the value their defined contribution pension members gain from their schemes by simply reviewing the arrangement with their pension provider, a consultancy has claimed.
Recent analysis by Hymans Robertson has found that a simple check by bosses can potentially increase member pots at retirement in the future by as much as 15 per cent.
The figure comes from its internal analysis that is conducted regularly using actuarial tools.
Hannah English, head of defined contribution (DC) corporate consulting for Hymans Robertson, said this was especially important now as the still-high inflationary environment means it is difficult for pension scheme members to increase pension contribution spend while protecting financial resilience.
She said: “There are many reasons why employers should consider reviewing their current arrangement, and by doing this they can ensure that members are getting the best possible retirement outcome."
Reasons include:
- Employers might discover costly inefficiencies that they can stop or opportunities to take advantage of profitable developments.
- They can make sure their providers are delivering market leading value that’s aligned to their corporate strategy.
- They could increase appreciation of the scheme after ensuring that their communications are as engaging as possible by harnessing all the latest digital tools and technical innovation.
She added that a switch to a master trust or contract-based solution could potentially reduce some of the cost and burdens of governance, freeing up time for improving member outcomes and risk management.
English added: “Understanding how the provider market has evolved and benchmarking arrangements in terms of proposition, price and service against others, will ensure that a scheme’s chosen provider continues to deliver the market-leading value.
"Also, understanding planned developments from providers and challenging them to be an early adopter will ensure members benefit as soon as possible from such developments.”
As such, Hymans Robertson has identified several ‘trigger points’ that could provide reasons to review a scheme. These includes a need for more focus on time and resource as well as the demand to improve a scheme’s propositions, price and service.
Other trigger points include wanting to understand future developments better, increase appreciation of the scheme and to align pension arrangements to an employer’s corporate strategy.
English added: “Now is an ideal time to review your pension scheme arrangement, in an era where hungry providers are looking to retain and win work.
"If you do decide to review your arrangement, it’s vital that you carefully assess and select the provider that will best serve you and your employees’ needs - getting the right support and advice is paramount to success and good member outcomes."
Aamina Zafar is a freelance financial journalist
