Pension perks could be key to best recruitment

THE automatic enrolment of Eligible Jobholders into Workplace Pension Schemes (WPS) has been under way for almost three years now. The largest employers “staged” first but the pace quickened dramatically and the industry (providers and advisers) is in the midst of a “capacity crunch”.

Employers in business (including individuals employing cleaners or carers) as of April 6, 2012 have been allocated a Staging Date of no later than April 1 2017. Newer businesses will stage later.

As WPS become commonplace, will jobseekers closely inspect the pension scheme on offer as well as salary? Having the right scheme could be the key factor in securing the best candidate for a vacancy.

“Banded Earnings cuts out the first £5,824 of qualifying income and anything over £42,385,” says Lesley Kean of Campbell Thomson. “Using a £25,000 basic salary, a Banded Earnings scheme with the three per cent minimum employer contribution and four per cent net employee contribu- tion (plus one per cent tax relief) means a net annual £767 employee contribution for a £1,534 overall pension contribution.

“Use a Basic Salary definition with a four per cent employer and four per cent employee contribution (3.2 per cent after basic rate tax relief) would require a net annual commitment of £800 from the employee. The value of the pension contribution is £2,000. Obviously this will cost the employer more but as they are putting in a pension scheme, why not a quality one?

“Salary exchange, where an employee exchanges salary in lieu of an additional employer pension contribution, saves both employee and employer national insurance, so this could help offset the additional cost.

“Some astute employers have picked up on the capacity crunch and are looking to get in the lifeboat before the options are down to Hobson’s choice – NEST (National Employment Savings Trust), the default position.

“If an employer has decided to provide a better than minimum pension scheme, why devalue it by being stuck with NEST?

“For staff nearer retirement age, industry experts have argued NEST is expensive with its 0.3 per cent annual management charge and 1.8 per cent contribution charge (in place until at least 2032). Campbell Thomson feels Group Personal Pension (GPP) schemes provide much more attractive and flexible WPS. Not all GPPs are the same. Several offer the pension scheme including default fund governance but not the assessment middleware and regulatory record keeping. Campbell Thomson can assist in getting you in the right lifeboat.”