In every business, there are certain tasks that you outsource.
Depending on your size, it may be parts of your marketing programme, or accounting function. Or you might outsource certain legal tasks, or customer support.
These are jobs that your company doesn’t necessarily have the manpower or expertise to handle. You may not be able to perform them in-house in a cost-effective way. Or perhaps you simply want access to specialist knowledge and skills.
So, you hand them over to someone else -
An individual or external team, who can give the job proper care and attention…
Free up your time…
Take over a responsibility which had been stressing out your team…
And allow you to focus on other work, which is your core competency (and which frankly, you prefer doing).
Outsourcing can certainly come with its own problems, but when done well, it’s usually a big relief.
Now imagine you could outsource responsibility for your pension scheme…
Yes, almost in its entirety!
Administering your pension scheme properly could be one of the biggest headaches you face.
The responsibility to ensure that you are delivering good outcomes for your staff is enormous:
You need to be ruthless about good governance, making sure that you set up your scheme correctly and then monitor its performance constantly.
You have to figure out how to get your staff to save more, even though they might show little interest in their pensions for most of their careers, and you are not a marketer.
You have to document every move, so that you can prove that you have done everything necessary to educate your staff about their pensions and administer the scheme responsibly.
And sometimes, if you’re still dealing with legacy schemes, you have to do all this for just a handful of employees. Sometimes they’re even former employees!
Dealing with the issues around your pension scheme can feel like climbing a mountain, particularly in the current regulatory environment. It’s a continuous slog.
And the risk of something going seriously wrong is frightening, given that it may involve the retirements of hundreds or thousands of people.
But this is not a responsibility you have to shoulder.
You could outsource management of your pension scheme to a Master Trust.
I started telling you about Master Trusts last week, because The Pensions Regulator is about to start authorising them, giving those that qualify its seal of approval.
As Master Trusts will be much more tightly regulated, it’s possible they will become a much more popular choice for many companies.
A Master Trust involves a board of trustees overseeing several schemes from different employers at the same time.
As the employer, you continue to control contribution levels.
But the day-to-day work, as well as the responsibility, is passed on.
The trustees make all the decisions around service providers and investment strategy. And they handle your governance, too – there is one governance structure for all the schemes in the trust.
You can rest assured that your scheme is being well-handled by experienced trustees, who can give it the oversight and attention it needs.
In our experience, often companies see a big improvement in the outcomes delivered to employees, because the trustees are able to be so hands-on – which is why this is often a very positive, and responsible move.
The trustees take on legal responsibility, too. And because of the economies of scale, you could benefit from lower annual management charges and administration fees.
The main reasons to consider a Master Trust are if you are finding administering your scheme too time-consuming, expensive or complicated, particularly as the regulatory burden grows.
You may be running a legacy scheme which is taking up a disproportionate amount of your time, or simply decide you want to devote more time and energy to other aspects of your business – whilst aiming to ensure your pension scheme is managed in the best possible way.
Wouldn’t outsourcing its administration free up your time – and reduce your stress? And wouldn’t it be reassuring to know that your employees’ pensions (…not to mention your own) were in such good hands?
If so, watch out for next week's blog, where I’ll explain in more detail what to watch out for when you’re picking a Master Trust.
And in the meanwhile, if you want to find out more about Punter Southall Aspire’s Master Trust, just click here.
It’s likely that your company already outsources many of its functions to help it run more smoothly. Outsourcing the administration of your pension scheme could make just as much sense.