The decision about which workplace pension scheme to choose for your nanny isn’t one that should be taken lightly.
Currently, there’s no obligation set out by The Pension Regulator to choose a scheme carefully, but many experts believe that it’s only a matter of time before workplace pensions turns into the next big financial scandal.
“In America, the business of providing staff with retirement benefits is taken very seriously,” says Henry Tapper, founder of Pension PlayPen, the pension selection and due diligence service.
“That means that if employers don’t take due care in the choice and governance of the plan they set up for their staff, they’re liable to civil prosecution.”
Choosing a workplace pension can be a daunting challenge, especially if you lack knowledge and experience. When an adviser provides a pension recommendation they match product features with client requirements and combine this with actuarial data. The data and information are crunched to produce product recommendations for their clients.
This is known as carrying out ‘due diligence. Due diligence should also consider the things that make a difference to pension scheme members such as fund charges, investments and retirement options. Due diligence needs to be recorded so there’s an audit trail of how a decision was taken
“I’ve been in financial services for 33 years and even where good advice was given, I’ve seen action taken against the adviser for not properly documenting what was advised and why,” says Tapper.
You may be called upon, at some point in the future, to justify your reasons for choosing your workplace pension scheme. Perhaps because your nanny is disappointed with the growth of their pension pot. Or he or she discovers that their contributions have been eaten away by charges.
So, when Tapper’s firm, First Actuarial, set up Pension Playpen to provide help on how to choose a pension they made sure that producing an audit to provide due diligence was taken was a priority, explains Tapper.
“We decided to build everything we knew about choosing a pension scheme into a computer program. This is powered by an algorithm and supported by actuarial certification which we can give to employers who followed the steps to choosing a pension properly.”
A minimal investment in due diligence ensures not just peace of mind, but the satisfaction that your choice meets the needs of your nanny.
Pension PlayPen costs £199 + VAT.