SPRING CLEAN YOUR PENSION SCHEME

By Sarah Tolson, Punter Southall Aspire

Sarah Tolson
Sarah Tolson

Deep in thought whilst sitting at my desk this week I looked out of the window at the emerging spring sunshine…and to my horror suddenly noticed that the window was long overdue a clean.

With another winter on its way out and the clocks changing, we all look forward to the coming spring and summer bringing brighter and longer days.  But if the windows aren’t clean, I for one definitely won’t be relishing the sunshine showing up the grime around my house, no matter how much of a Vitamin D benefit I’m getting!

I realised it was time to get out the cleaning products and make sure not just the windows but the whole place would be spick and span ready to enjoy the next few months.

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Later, whilst whisking a feather duster around, it occurred to me that much the same is true of a pension scheme.  When was the last time you looked closely at your scheme arrangements, or are they invisible under a metaphorical layer of dust from the past few months?

If you’re like me then spring provides an energy boost each year so now’s your chance to take another look and see what may need freshening up ready for 2018.

So if you’re going to ‘spring clean’ your pension scheme, which parts do you need to concentrate your elbow grease on?

  • Governance
    Setting a scheme up in the first place can be a bit like moving house. The hassle is up front but once you’re settled in, the house seems fine and it’s tempting to take the ‘if it ain’t broke…’ view that everything will tick along looking after itself and you don’t need to monitor it too closely.
    Meanwhile, the more enlightened recognise the importance and value in maintaining their house regularly.  This equates to undertaking a regular review of the scheme to ensure that everything is still functioning as it should and they can make any necessary adjustments or carry out maintenance along the way.
  • Investment
    As well as cleaning the house in the spring, you may need to check that all systems are still working correctly ahead of the coming winter. Funds, particularly the default fund, have a similar role to the heating system, and no-one likes an unexpectedly cold shower!Fund performance is a key part of the pension arrangement and it needs to be constantly monitored to ensure it’s delivering the expected outcome for the appropriate level of risk. Investment markets are extremely dynamic, particularly in these uncertain times, and some funds are lagging their own benchmarks, never mind the performance of their competitors. The action point here is to keep track of market and fund performance and make sure your funds, and especially the default fund (where, over 90% of your scheme members are likely to be invested) are performing as well as expected.
  • Communications
    Before you start scrubbing and polishing, you may want to check over your cleaning products themselves. Are they still working OK or have they lost their magic sparkle over the winter?  If you’re struggling to clean (or get your messages through and engage your staff with your pension scheme) this may mean you need to get hold of some new products altogether. In Communications terms, this equates to reviewing your approach: do your staff ‘get it’ or does it need updating to make it fully effective?
  • Contribution benchmarking
    Whilst cleaning your house you may also be interested in what your neighbours (or business competitors) are doing. Are their houses cleaner than yours and attracting more visitors (or recruits) as a result?  You can find the answers to some of these questions by carrying out contribution benchmarking. Benchmarking your benefits against your peers is essential to remain competitive, and you also need to ensure your policies are up-to-date and giving your staff what they want. If you need an extra pair of hands on this one, Punter Southall Aspire can help you find out how your contributions stack up and develop an appropriate and affordable strategy.

Before you get too alarmed, the good news is that none of these clean-ups have to be too onerous – just like normal cleaning jobs, if you tackle them regularly they won’t get the chance to really build up.  And isn’t it better to ensure your scheme is performing as well as possible by doing little and often, than have a mountain of cleaning to do when you do get round to it?

Right…now where did I leave those Marigolds?

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