Pension Scheme - 01 January 2018

[ghost]

EDITED to include actual tasks:

• Research options
• Open to everyone for comment for a month
• @iteles to review options and make a choice
• Speak to bookkeeper about requirements on Xero
• @rub1e to take care of enrolment with scheme
• Pensions letters to dwylers drafted
• Pensions letters to dwylers sent
• Review Xero setup with bookkeeper
• Document any process changes that arise in payroll
• Create benefit account for pension refunds: guide
• Send provider Know Your Customer proof - void cheque, paying in slip, or recent bank statement

---

Original issue:

Our staging date is 1 Jan 2018, so this becomes a legal requirement then

Xero Sync: https://www.pensionsync.com/

NEST http://www.nestpensions.org.uk/schemeweb/NestWeb/public/home/contents/homepage.html
The People's Pension https://thepeoplespension.co.uk/

Legal and General http://www.legalandgeneral.com/workplacebenefits/employers/workplace-pension/ (L&G only allow scheme set up up to 1 month after the staging date)
NOW https://www.nowpensions.com/what-we-offer/workplace-pensions/for-employers/
Smart Pensions https://www.autoenrolment.co.uk/
Aviva https://www.aviva.co.uk/business/workplace-pensions/

Consultant = Husky Finance https://huskyfinance.com/

http://www.thepensionsregulator.gov.uk/en/employers/duties-checker/outcomes/i-am-an-employer-who-has-to-provide-a-pension/work-out-who-you-need-to-put-into-a-pension-scheme?xtor=EPR-81-[Portrait_2016]-20160317-[CoreEJHwhoToPutinScheme]

http://www.thepensionsregulator.gov.uk/en/employers/duties-checker/outcomes/i-am-an-employer-who-has-to-provide-a-pension/declare-your-compliance?xtor=EPR-81-[Portrait_2016]-20160317-[CoreEJHdeclaration]

[iteles]

Why is this a priority-2 issue?

[ghost]

@iteles was conducting quick initial research as it popped up on payroll - doesn't need to be fully actioned until end of the year

[iteles]

Moving to p4 in line with #349

[iteles]

We'll be postponing this for 3 months to allow us to write up all of the information for dwylers in a way that will enable informed decision making. http://ukpensionsautoenrolment.co.uk/survival-guide/postponement/

A letter will go out to explain this.

[rub1e]

Pensions - it's time to adult

Pensions are fun! (And sensible)

Let's just assume you want to plan for the future and start your pension. Good for you, that's smart.

The way this works is that you put some of your salary into a pot, and your kind employer dwyl matches it (up to 1% of your annual salary).

Your pension pot is managed by dwyl's pension provider, who invest your money for you until you're old enough to retire and buy an annuity (or whatever you choose).

In return for managing your money, the pension provider charges a fee, usually in the form of a percentage of your whole pension pot, a percentage of your monthly contributions, a flat monthly fee, or a combination of these.

PLEASE DO NOT JUST READ THIS SHORT SUMMARY - IT'S NO SUBSTITUTE FOR ACTUALLY READING AND LEARNING ABOUT PENSIONS PROPERLY. THIS IS YOUR FUTURE!

INVESTMENTS CAN FALL IN VALUE AS WELL AS RISE: IT'S YOUR RESPONSIBILITY TO UNDERSTAND THE RISKS

Options

dwyl needs to choose a provider now and has identified two main contenders for your consideration (outlined below, along with a few that were rejected).

In addition to being good value for dwylers financially 🤑, key considerations were ease of use (for you and for dwyl) and flexibility (can you tailor how the provider invests on your behalf, more/less risk, ethical investments etc.).

(Not to mention obvious hygiene factors like having an accessible call centre or usable website.)

The People's Pension (TPP)

(Try not to be swayed by the name alone!)

• Fee: 0.5% of your total pension pot every year (see note below)
• Investment choice, flexibility, & security
  • Ethical and Sharia investment options available
  • Low effort “investor profiles” (e.g. cautious/risky) give employees control without taking up their time, but more granular control is also available
  • Glide Path (see note below)
• UK Call Centre (inc. evenings & weekends)

TPP's parent company is a well-established non-profit and many companies small & large use them as a pension provider. They integrate well with dwyl's accounting system. dwyl would pay a small one-off setup fee of £500.

Nest

• Fee: 1.8% on all contributions + 0.3% total fund annual fee (see note below, sounds worse than it is!)
• Investment choice, flexibility, & security
  • Ethical and Sharia investment options available
  • Granular control available, but more user input required, doesn't look as off-the-shelf as TPP
  • Glide Path (see note below)
• UK Call Centre (inc. evenings & weekends), live-chat online

Nest is the government workplace pension provider (National Employment Savings Trust), so very many companies use them. They also integrate well with dwyl's accounting system. No setup fee.

Rejected

• Smart Pensions: would have made the list if not for being slightly worse in every category. 0.75% fee, Sharia but no ethical fund, have to email in for granular control rather than do online, call centre only during working hours.
• Legal & General - rejected because website was dense, corporate, and confusing - the opposite of holding your hand through difficult financial decisions; but basically the same services as above with 0.5% annual fee. No integration.
• Aviva - c. £40/m for dwyl, plus 0.75% member annual fee - unclear what the extra costs get you, seems extremely bad value for both dwyl and dwylers. Mixed reports on integration.
• Now Pensions - 0.3% member annual fee + £1.50/m (can be paid by employer or employee), apparently very little flexibility, sharia but no ethical fund (though they subscribe to responsible investment principles). Would you believe their site doesn’t use SSL?!
• Creative Auto-enrollment: £20/m for dwyl, plus 0.4% member annual fee + £2/m. Literally nothing on the site about ethical/sharia/flexibility etc. And, frankly, the whole site looked really dodgy. Bad value and bad vibes.

Notes

Difference in fees

TPP and Nest take different approaches, with different results. I only want to make this note because Nest's 1.8% contribution fee looks like a bigger deal than it really is.

Let's say you make £24k in Year 1. You and dwyl put 1% into the pot - that's £480.

• Nest takes 1.8% of contributions (£480) + 0.3% of total pot (£480) - so Nest takes £10.08
• TPP takes 0.5% of total pot - so TPP takes £1.44

💥 💥 💥

No brainer, right? A tenner vs a bus ticket? But now let's say it's the future and you're earning £75k and your pension pot has fared well and grown to £100k! You and dwyl put in 1%, so that's £1,500

• Nest takes 1.8% of £1,500 and 0.3% of 100k = £327
• TPP takes 0.5% of 100k = £500

Not so easy now, is it!

The point of the above exercise was just to illustrate the importance of understanding this stuff yourselves. Because, and I can't stress this enough,

THIS IS NOT FINANCIAL ADVICE, DO YOUR OWN DUE DILIGENCE BEFORE EXPRESSING A VIEW

Glide path

The glide path creates an asset allocation that becomes more conservative (i.e., includes more fixed-income assets and fewer equities) the closer a fund gets to the target date.

Or, in English, the provider will automatically start moving your pension pot into more secure, less risky investments as you near retirement age. You don't need to micro-manage your pension if you don't want to.

In conclusion

Read it, digest it, think about it, ask about it. If you don't have questions about how pensions work, you probably haven't looked into it enough. For example, you'll notice I haven't mentioned the providers' investment track records. That's because

THIS IS NOT FINANCIAL ADVICE OR A SUBSTITUTE FOR YOUR OWN RESEARCH

[iteles]

We will need to check that this piece of info is clear on the letter templates we get from TPP:
http://www.thepensionsregulator.gov.uk/doc-library/increases-in-minimum-contributions-automatic-enrolment.aspx

dwylers must be set up automatically on TPP and then if they decide to opt out, must create their own account on TPP to opt-out by 31-Mar-2018.

[rub1e]

UPDATE: following extensive research, consideration, and debate, @iteles has decided that the best provider for dwyl's needs (despite being the only provider with a hefty £500 signup fee which the founders are kindly shouldering 🙌 💞 ), and - more importantly - for dwylers' needs, is The People's Pension 🎆

We're halfway through the setup process with TPP, and we expect letters to go out this week or next week with all the details for employees. Watch this space... 👁

[iteles]

Letters for this went out earlier this week to @naazy, @SimonLab, @Cleop and @Danwhy.

@rub1e, over to you to finish the enrolment once #415 is complete 👍

[rub1e]

We're signed up withe TPP and I've connected the Xero payroll system as well.

I'm waiting for a couple of queries to be answered, but the next step is for me to upload all dwyl employees' particulars, and then distribute login details so people can access their accounts on the TPP website.

@iteles and I will also have a chat with our bookkeeper and check that everything looks like it was set up properly (w/c 12/3)

[rub1e]

All employee data has now been submitted - so with any luck employees will receive a communication from TPP tomorrow (21/3). (I'll be checking in to make sure)

[iteles]

Emails now also sent out confirming that opt-out is only available after the first pay run (April) and anyone who opts out will receive a refund for the first month.

[rub1e]

Update - final two tasks (documentation and processing refunds from opt-outs) can't be completed until the opt-outs have requested their refunds and we've had confirmation from TPP about a separate query regarding Xero/TPP integration

[rub1e]

Update - Xero and TPP aren't integrating at all. As usual, each party is blaming the other's systems.

I've done everything I can to make sure the details on each system are correct - the problem is on one/both of their ends, but neither is taking responsibility.

To make matters worse, we owe TPP a bunch of money but we can't settle up until the systems are talking to each other. They won't chase us until the payment is 90 days overdue (September), but still this is hardly ideal.

So #474 can't be completed until all this is sorted

[rub1e]

Update - Xero have confirmed that the problem is on the TPP side, and I've sent TPP the instructions that Xero sent me.

I'm waiting for this to be complete before I finish the last two tasks on this list

[rub1e]

Just been chased for pensions data per #474 (comment) (will write process up when I've figured it out!) and it jogged my memory - @iteles did you or @nelsonic ever log in to The People's Pension to claim your refund?

[iteles]

Ah, no, I'll add it to my list!

[rub1e]

Bump @iteles!

I've added this to the top of your project - it's not urgent, just needs to be done so I can reconcile wages as part of #461

[iteles]

As you saw yesterday:

I've sent them a support request, let's see!

[iteles]

@rub1e As we discussed, the reply I eventually got was:

Our records show you opted out of the pension scheme on 31st May 2018 and a refund of your contributions was issued to your employer on 1st July 2018.

Please check for the refund and take the necessary steps 👍