Delivering cost-effective employer pension solutions
Charity enjoys introducing extended employee benefits resulting from novel master trust pension solution
A national charity with employees in a broad range of salary scales and unpredictable working patterns had no pension arrangements. It needed to satisfy the employer’s responsibilities of pension auto-enrolment introduced by the government. Via a referral from another client, the charity contacted us seeking an affordable pension solution that satisfied auto-enrolment requirements and was consistent with the charity’s caring philosophy.
Following an initial review, we swiftly established that the mainstream pension providers would be unwilling to provide a cost-effective pension scheme with reasonable charges. Furthermore, the contribution restrictions for a National Employment Savings Trust (NEST) solution would be insufficient for some of the charity’s employees.
The solution was to investigate new ‘master trust’ options, providing an attractive and affordable pension framework for the charity. We also identified that savings could be obtained by arranging member pension contributions through salary sacrifice. Our advice included detailed analysis and comparison of the key product features of the various master trust options, leading to us providing a clear recommendation. The charity also took the opportunity to put in place lump sum death benefit cover for all employees for the first time and also sought our help in setting up a governance framework for their pensions committee, and in communicating the new arrangements and benefits to their staff.
The charity was delighted with the new pension arrangement and death-in-service cover, which was rightly viewed as very valuable.
Intensive support equips new trustee with key skills
From bespoke training to investment modelling, a new trustee receives intensive support allowing her to make an immediate positive impact
A new trustee was appointed to the board of an existing client’s scheme. To ensure she was equipped with the knowledge and skills to make an effective impact, we created and implemented a bespoke training programme, alongside providing other key documentation. This included face-to-face updates on the scheme history and its issues, alongside briefings on current hot topics in the industry and legislative landscape.
Using our interactive funding modeller, we also provided training on more in-depth technical subjects, such as investment considerations and actuarial funding issues. Our interactive funding modeller enabled us to actually demonstrate the scheme’s funding sensitivities to key assumptions to the new trustee.
Further support included question and answer sessions prior to and following trustees’ meetings. The new trustee was so pleased with our explanations of complex topics relating to the scheme, she referred members with queries about their scheme’s benefits directly to our team.
This example demonstrates our timely and hands-on approach to supporting our clients, and how we tailor our approach to the individual needs of trustees. The trustee noted that our support enabled her to make a positive contribution to trustees’ discussions at a much earlier stage than would otherwise have been possible.
Maximising employee pension contribution tax reliefs
Delivering in-depth advice on allowances detailing how employees can minimise the tax implications of pension contributions
In successive Budgets, the Chancellor has gradually reduced lifetime allowances and annual pension contribution allowances. The result has been an increase in tax liabilities for pension contributions, particularly for employees at a senior level. To ensure tax liabilities are minimised, and all available tax reliefs are utilised, we have proactively assisted our employer clients to consider their pensions strategies within the context of their broader employee remuneration packages.
As part of this proactive assistance, we have prepared and presented to remuneration committees and our client’s legal advisers, briefing papers outlining options on future corporate pension strategies. In addition to considering those people who may be affected, and identifying any relevant special protections and reliefs available, we have developed a number of documents to illustrate, in simple terms, the potential impact on pension accrual on a year-by-year basis, depending on the options taken.
We have also been involved in directly helping the affected people; these are often directors building up substantial pensions. Our support has included assisting senior employees with considering their overall benefits packages. This includes, for example, the implications of historic retained pension benefits built up elsewhere, as well as the most appropriate approach to future pension accrual.
We have enabled our clients to ensure that pensions are appropriately accounted for within overall employee remuneration packages. Senior employees have particularly appreciated our proactive approach to maximising the tax reliefs available for their own pension contributions.
Our clear explanations have been praised by both our employer clients and the employees affected.
Investment planning meeting individual financial goals
A whole-of-market portfolio review enables an individual saver to reduce risk and help meet their investment objectives
As a result of disappointing returns on their investment portfolio during a period of rising asset prices, an individual investor came to us for advice, following a referral by a family member who is an existing Gemmells client. Our initial assessment identified that the asset allocation within their current portfolio did not match their attitude to risk. There were also a number of funds held, which represented such a small percentage of the overall total portfolio and therefore would not have added significant value, even if they had performed well.
Following careful consideration, including market research and analysis, we recommended a revised portfolio of investments. These included investing in both new as well as retaining some existing funds, with an overall structure more aligned to the client’s risk/reward preferences. We recommended managed funds that were expected to generate the returns required by our client, with lower volatility and risk. We achieved this through a mixture of managers with strong track records, robust investment processes and carefully considered asset classes.
Given that their risk/reward characteristics fitted our client’s profile, we also introduced increasingly popular diversified growth funds. The final component was funds where the manager has an extremely flexible investment remit, enabling them to quickly change the allocation of assets in line with their market views and current conditions. Our ongoing regular monitoring then ensured that the portfolio met and exceeded the client’s investment objectives, with profits being extracted and funds replaced if, for example, a key manager changed employment.
To find out how you, or your organisation, can benefit from our actuarial and investment management solutions, please contact us.