Choose the right pension scheme

Key considerations when choosing a pension scheme


When you choose a pension scheme, you need to consider key issues such as:

  • The level of funding you as an employer are prepared to give.
  • What income you want your pension to deliver to your employees.
  • The extent to which you will have to consult with employees about changes to the scheme(s) you offer.
  • Whether you want to be able to change your pension scheme easily. Generally you will not be able to do this retrospectively, so it's important to try to get it right first time.
  • Whether there are areas in which you would like/not like your pension scheme to invest, for example in ethical investments.
  • The charges, costs and penalties.
  • The reputation of the pension provider, but remember that past performance is no indication of future returns.
  • What happens to the pension benefits if a member dies.
  • Whether your scheme will comply with changes such as automatic enrolment into workplace pensions. Read more on automatic enrolment into a workplace pension.

Pensions advice

If you are unfamiliar with the legislation and tax regulations that govern pension schemes, you may find it useful to consult an independent financial adviser or pension adviser before you make a decision.

You can obtain free information, guidance and advice about pensions from the Pensions Advisory Service.

Alternatively, you can find a local qualified adviser dealing in retirement pensions and annuities.

Review and monitor pensions

Your situation, and that of your employees, will change all the time. It is a good idea to review their pension needs regularly and monitor the fund to make sure it is giving good returns.

If you have any complaints about how the overall pension scheme is run, your first point of contact will vary depending on the type of scheme you have. If the scheme is defined benefit or defined contribution, you should contact the trustees, or if you have concerns about the trustees, speak to the Pensions Regulator. If the scheme is contract-based, you should contact the provider, or get in touch with the Pensions Regulator if you have concerns about the provider. Read Pensions Regulator advice for employers. The Pensions Ombudsman is the final arbiter of any problems.

Employers who run into problems with salary-related schemes should seek professional or legal advice. Choose and work with a solicitor.