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Looking at the nest scheme there is a 0.3% annual management charge and a 1.8% contribution charge. Plus it's free to set-up (free lunch syndrome). Looks fairly simple to set-up looking at the info needed.
However, FSB is £399+vat to set-up, 0.5% annual management charge, and no contribution charge. So, your employee and employer contributions will go further with the FSB scheme long term (rough payback for 2 employees could be around 5 years). No real benefit for you though.
As ever, nothing is for free, it's just how they get you to pay for it!
We went with NEST and the reasons you mentioned are one of the reasons we chose it and have been borne out. We've been staged for over a year now.
I would select the solution that is best value for the Company. Key to remember is that you can not give advice or exert +/- pressure on employees over what they do.
I'm just hitting 50 and I spend quit a bit of time looking at my pension position. I'm fortunate in having been in a mix of good company schemes and personal schemes where I and company contributed 7% each. Can't stress the importance of starting early and making regular contributions.
I can't advise my staff but I will be trying hard to make it attractive to them to go into the scheme and stay there with good levels of matched contributions.
Understanding what attracts an employee is key and needs looking at from all prospectives.
I sat my guys down with our HR Manager service last year to understand what drives them. One subject that became clear is, in general, the younger they are the less interested they are in savings, pensions etc and it would not be something they valued. They wanted money in their pocket, now. None wanted to participate in Pensions. We can all say that's wrong, they need to start early to save for later life, but someone in their early 20's wants the latest phone, or sound system in their car. The oldies however, saw the benefit and wanted it and have stayed contracted in.
So, it's a mix of incentives that is needed from their prospective. From an Employer's prospective, you need to look at the typical employment life span of an employee, assess the cost of that benefit on the bottom line and see if it makes financial sense....I chose the lowest cost to the business while trying to provide the best value for money option for those that wanted it.
Leverage HMRCs allowance for Trivial Benefits.... :)
The other thing in my mind is that wrt to turnover, people are quite transient in this industry, so new members of staff are more likely to have been in either the FSB or NEST schemes than others, so picking one of those may make things easier in the longer term re management.
Gary, what do you do re the ongoing management needs - who does that & what cost? Is it onerous - eg looking at the FSB Premium vs essentials.
It's 'outsourced' to our Accountants. They have invested in software that bolts onto SAGE payroll and interfaces to Pension scheme providers, eg NEST. So from my prospective it's all seamless.
Every payday, their earnings are assessed by the system to see if they need to be Opt'd in in etc.All communications are delivered electronically to their mailboxes and they each have a NEST logon as well. We also now deliver their payslips online to a 'Portal'
The costs were similar to set up compared to FSB BUT our Accountant's offering is integrated. With the FSB you still need manual intervention for your PAYE to/from Pensions systems. We pay a cost per employee per month for PAYE and then if enrolled a Pensions management cost.