Adviser template:
Suitability report
This document is intended as an example guide only,
to assist you and is not provided as a recommendation.
NOW: Pensions Limited is not responsible for any
changes made to this document.
AM00059.0517/10
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Contents
1.
2.
3.
4.
Introduction
Overview of auto enrolment
The Pensions Regulator and potential fines
Your responsibilities and how automated systems are essential
a. Key points
b. Prohibited actions
c. Minimum contribution requirements
d. Assessment and categorising your workforce
e. Employee communications
5. Your options when selecting a pension scheme
6. Postponement
7. Auto enrolment systems and compliance – “business as usual”
8. Our recommended pension provider
9. Implementation plan and suggested next steps
10. Statement of our fees
1. Introduction
We met on [date] to discuss how the new workplace pensions legislation and auto enrolment is
likely to affect your business. I outlined the major aspects of the legislation and you described to me
your general thoughts and attitude towards them.
This report will set out again the main aspects of auto enrolment, how they affect you and your
responsibilities in meeting the legislation. I have made recommendations as to which pension
provider I believe is likely to be most suitable for your needs, and the most efficient and cost
effective way of ensuring you become auto enrolment compliant and remain so.
This report is limited to auto enrolment and setting up a suitable workplace pension scheme; it
reflects the information you have given me. If you believe that I have misinterpreted your situation
then please contact me straight away.
Our discussion on [date] highlighted some particularly important aspects to you:
1)
2)
3)
4)
5)
You wish to provide a scheme that operates low charges for employees and is simple for them
to understand
It is important that the scheme is low cost for you, the employer, to set up and maintain over
the years
You do not wish to make proactive decisions about the ongoing running of the pensions
scheme; therefore strong independent scheme governance is essential
It is more important to you that the chosen pension scheme has a strong default investment
option than many funds for employees to choose from
You require the pension scheme to be integrated easily with payroll to enable efficient and cost
effective delivery of communications and other auto enrolment regulatory requirements
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2. Overview of auto enrolment
In October 2012 the government introduced the requirement for employers to enroll their
employees into a qualifying pension scheme without employees having to take any action. Known as
auto enrolment, this change to workplace pension provision brings with it a vast amount of
information that employers need to process in order to comply with their obligations.
Employers have dates from which they must implement a qualifying pension scheme, these are
known as “staging dates.” All staging dates occur on the first of a month between October 2012 and
2018 and have been allocated to each employer, generally based upon the number of employees
that were registered on its PAYE scheme by HMRC in April 2012. You can confirm your staging date
by visiting The Pensions Regulator website and using the tool provided, however I can confirm that
your staging date is [date.]
3. The Pensions Regulator and fines
There are certain employer duties you must comply with. If you fail to comply with your duties The
Pensions Regulator (TPR) may take enforcement action and issue a notice and/or a penalty.
Key Points



The responsibility for complying rests with the employer
If you don’t comply you will face enforcement action in line with TPR’s risk based approach
Endorsement action starts with statutory notices and is followed by penalty notices, which may
result in court action
The Pensions Regulator (TPR) wants to help employers comply with legislation. It is not in the
business of wanting to fine employers and stated in its “Employer duties: Our regulatory approach”
document published on 20th June 2012:
“We will be firm but fair to non-compliant employers. In cases where you have not
understood your duties or been unable to comply, we will work with you to get you compliant.
However, if you have chosen to ignore your obligations we will use our powers where
necessary to ensure compliance.”
Nevertheless, fines can be severe and the published level of Escalating Penalty Notices for breaches
is as follows:
Number of employees
Prescribed daily rate (£)
1-4
5-49
50-249
250-499
500+
50
500
2,500
5,000
10,000
It is worth noting that TPR is starting to use its powers. In the quarter 1st January to 31st March, it
issued 198 fixed penalty notices (£400 fine) and for the first time has issued four escalating penalty
notices.
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4. Your employer responsibilities
The auto enrolment regulations require employers to ensure they have the following key points
covered:
4a. Key points








Pay regular contributions into a qualifying pension scheme
Assess and monitor the age and earnings of all staff, and any new staff joining
Communicate the correct statutory notices to employees
Process any opt in, joining or opt out requests
Keep and maintain accurate records
Register the pension scheme with The Pensions Regulator
Re-enrol eligible jobholders that have opted out of the scheme, every three years
All of this should become 'business as usual', just like real time PAYE
4b. Prohibited Actions



Coerce employees into opting out of the scheme
Give investment advice to employees
Adopt recruitment policies to make it more likely that employees will opt out of the scheme
The above is not an exhaustive list. Employers should think carefully about auto enrolment
legislation before taking actions to ensure they may not inadvertently fall foul of any of the
legislation.
4c. Minimum contribution requirements
You will have to make regular payments into the pension schemes of all staff who you automatically
enrol and all those who choose to opt in.
There is a minimum legal level for overall contributions, including the minimum that employers must
pay. The government has allowed employers to phase contributions to ease the initial impact as
follows:
Date
Employer’s staging date to
March 2018
April 2018 to March 2019
From April 2019 onwards
Minimum employer
contribution
Minimum total
contribution
1%
2%
2%
3%
5%
8%
These contribution levels are minimums. Both employers and employees will be able to contribute
more should they wish to do so.
The minimum amount that must, by law, be paid into the pension scheme from April 2019 is 8% of
the member’s gross earnings, but only on their earnings between lower and upper limits specified
every year in the legislation. This is known as “Qualifying earnings” or “Band Earnings.”
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‘Qualifying earnings’ is a reference to earnings of between £5,876 and £45,000* made up of any of
the following components of pay (‘earnings’) that are due to be paid to the employee:









Salary
Wages
Commission
Bonuses
Overtime
Statutory sick pay
Statutory maternity pay
Ordinary or additional statutory paternity pay
Statutory adoption pay
4d. Assessing and categorising all employees according to age and earnings
There are three categories into which employees will fall:
Eligible jobholders
These are employees who
are aged from 22 to State
Pension age and earn more
than £10,000* per annum.
This is the most important
category because you as an
employer must ensure that
they are automatically
enrolled.
Non-eligible jobholders
Entitled workers
These are employees who are
aged between 16 and 21 or
between State Pension Age and
74 and have earnings greater
than £10,000 per annum
OR
Are aged 16 to 75 and earn
between £5,876 and £10,000*.
These are employees who
are aged between 16 and 75
and who earn less than
£5,876* per annum.
For auto enrolment purposes,
they do not need to be enrolled
but they have a personal right
to opt in. If they do decide to
opt in, you as an employer must
make a contribution on
their behalf.
For auto enrolment purposes
they have a right to join the
scheme but there is no
obligation for you as an
employer to make a
contribution on their behalf.
Employee types explained
“Workers” – You will have to provide them with joining rights to a workplace pension however you
do not have to make a contribution on their behalf.
“Jobholders” – You will have to provide them with joining rights to a workplace pension and make
contributions on their behalf. As noted above non-eligible jobholders have the right to opt-in
whereas eligible jobholders must be automatically enrolled.
“Self-employed” – These individuals are not classed as workers. Staff who have no guaranteed hours
of work are classed as workers for the purpose of auto enrolment. This is a complicated area, we can
offer general guidance but you should seek qualified legal advice in specific areas where necessary.
*correct for 2017/18 tax year
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“Agency workers” – You should note that if you have agency workers, regulation states that: Where
they have a contract of employment with the agent, agency workers will be managed, for auto
enrolment purposes, by the agent. If they have a contract of employment with the principal
(employer), they will be managed, for auto enrolment purposes, by the employer.
As part of the analysis to establish the lowest cost contribution basis for you (above) I established
that your workforce for the payroll data submitted was categorised as follows:



Eligible jobholders: xxx
Non-eligible jobholders: xxx
Entitled workers: xxx
You must ensure that the correct contributions are deducted from each employee’s pay every pay
period. This means that all non-eligible jobholders and entitled workers need to be assessed in every
pay period. This is complex and requires the pension scheme to be integrated with your payroll
systems in order to generate a data file that can be used at the end of each payroll period. This file
should not only allow you to deduct the correct funds from your employees but also to manage new
joiners, opt outs, send the correct communications and maintain the required records for TPR.
4e. Employee communications
It is in your best interests to ensure that employees are made aware what will happen in the lead up
to your staging date. I recommend that I work with you to establish a thorough pre staging
communication plan which will ensure maximum employee understanding and prevent unnecessary
confusion and questions to you and your senior staff.
Pre staging date communications are advisable. However, at the time of your staging date there are
strict statutory communications that you must issue to all your employees within six weeks of your
staging date. These include:



Postponement notices (if you choose to postpone your staging date)
Assessment letters
Information about how auto enrolled employees can opt out of your scheme
Records of all communications must be kept in case The Pensions Regulator decides to carry out an
audit on your auto enrolment processes.
This can be very labour intensive and if not automated through system integration with payroll is
likely to fail. Fortunately there is something called “middleware” which automates all the auto
enrolment compliance functions and this is described in more detail below. Our pension provider
recommendation has good middleware so that you can relax in the knowledge that your
responsibilities will be made as straightforward as possible.
Declaration of Compliance: Registering your scheme with The Pensions
Regulator
Once auto enrolment has been completed, you will have a legal requirement to submit information
to The Pension Regulator to prove how you have complied with your duties as an employer. This
information has to be provided online and you could face enforcement action and incur a fine if you
do not provide it. You have five months from staging to complete registration and you will have to
re-register every three years. I can help you gather the information you will need to comply with
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these requirements.
5. Your options when selecting a pension scheme
You have three choices:
1.
2.
3.
Use an existing
scheme (if you
have one and it
qualifies)
Setup a new
scheme
Run more than
one scheme for
different
categories of
employees
Any one of the choices above can be used as long as the scheme(s) selected meets minimum auto
enrolment qualification criteria. These criteria include:



No barriers to auto enrolment, opting in or re-enrolment of a jobholder
No requirement for the employee to make any choices or provide any information
The availability of a default investment fund. Employees can be provided with a fund choice if
the scheme rules allow it. From April 2015, legislation has been in place requiring that the
default fund charges total no more than 0.75% pa.
From discussions with you and your current pension provider we have established that the existing
scheme does not meet the minimum criteria for auto enrolment. You must therefore make the
necessary changes to it or enrol all existing members into a new scheme. We recommend the new
scheme in section 8 of this report.
All workers not currently in your existing pension scheme will need to be auto enrolled into it or a
new qualifying scheme. From previous investigations and discussions with you we do not believe it
practical for your existing scheme to be made compliant and we recommend setting up a new
scheme to accommodate all your employees. Our recommendations are contained within section 8
of this report.
You do not have an existing pension scheme for employees so you will need to set one up. Please
refer to section 8 of this report for our recommendation as to the most suitable pension provider.
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Pensionable salary definitions – the options
Existing defined contribution pension schemes, whether occupational or personal pension schemes,
will base contributions on percentage rates of pensionable pay. The definition of pensionable pay in
the scheme rules is likely to be different to qualifying earnings. Pensionable pay may just include
basic pay and not overtime or bonuses and may require contributions to be deducted from the first
pound earned, or from a band of earnings different to qualifying earnings.
In recognition of this, employers with schemes of this type are able to self-certify that their scheme
meets the minimum requirements. One way of doing this is for employers to certify their scheme
with respect to one of the alternative requirements. The alternative requirements comprise three
sets as follows:
Set 1
A total minimum contribution of at least 9% of pensionable pay (at least 4% of which
must be the employer’s contribution), or
Set 2
A total minimum contribution of at least 8% of pensionable pay (at least 3% of which
must be the employer’s contribution), provided that pensionable pay constitutes at
least 85% of earnings (the ratio of pensionable pay to earnings can be calculated as
an average at scheme level), or
Set 3
A total minimum contribution of at least 7% of earnings (at least 3% of which must
be the employer’s contribution) provided that all earnings are pensionable.
The contribution rate for schemes using certification is also being phased in. The rate will depend on
which set of certification is being used. The rates for all three sets are set out below.
Set 1 phasing
Transitional
period
Duration
1
Employer’s staging date to March 2018
2%
3%
2
April 2018 to March 2019
3%
6%
3
From April 2019 onwards
4%
9%
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Employer minimum Total minimum
contribution
contribution
Set 2 phasing
Transitional
period
Duration
Employer minimum Total minimum
contribution
contribution
1
Employer’s staging date to March 2018
1%
2%
2
April 2018 to March 2019
2%
5%
3
From April 2019 onwards
3%
8%
Set 3 phasing
Transitional
period
Duration
Employer minimum Total minimum
contribution
contribution
1
Employer’s staging date to March 2018
1%
2%
2
April 2018 to March 2019
2%
5%
3
From April 2019 onwards
3%
7%
Which contribution and pensionable salary basis is right for you?
You stated to me that your primary concern is to keep overall contribution costs as low as
possible within the legal requirements. As part of our service I can analyse your most recent
payroll data and carry out an analysis based upon the different definitions of pensionable pay
described above. This will enable me to identify with you the likely overall costs of auto
enrolment for your business, the current assessment categorisation of your workforce and the
best definition of pensionable pay for your scheme to use. A report showing this analysis will be
available to you.
6. Postponement
I believe that you should use Postponement as it gives you flexibility and the ability to reduce costs
both at the outset (your staging date) and on an ongoing basis. Postponement allows you to defer
auto enrolment for your workers for a period of up to 3 months. Postponement can only be used for
a worker on certain dates:



Your staging date, in respect of any workers employed on their staging date
The first day of employment, for any worker starting employment after the staging date
The date a worker meets the criteria to be an eligible jobholder after the staging date
We can advise on the best use of postponement for all initial and future enrolled employees taking
into account factors such as probation periods and aligning to the start of pay reference periods
which may significantly save ongoing administrative burden.
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7. Auto enrolment systems and compliance
The Pensions Regulator remarks that auto enrolment should “become business as usual.”
To make this happen it will almost certainly require you to automate compliance through
integrated systems.
Your payroll system will need to interface with other technology in order to automate most/all of
the auto enrolment regulatory processes that you are responsible for. The processes include:





Assessing the eligibility of the workforce each pay period
Making contributions to the auto enrolment scheme
Recording members who may decide to opt out and opt in
Issuing correct postponement notices and statutory joining letters to each employee
Maintaining the required regulatory records for TPR inspection
It could be that your existing payroll software may already support some of these requirements but
you will need to establish its capability very soon and we can help you do this.
To ensure a robust auto enrolment process, a company’s payroll system needs to have an
automated exchange of data with the pension system.
It is essential that data is transferred accurately and in a timely manner between payroll software
and the pension administration system. Our recommended pension provider has worked with the
vast majority of payroll software providers and has the auto enrolment systems and experience to
ensure the required data transfer each pay period is achieved.
If your payroll system is not particularly auto enrolment friendly we suggest upgrading it at your
earliest convenience. We can advise as to whether this may be necessary.
8. Our recommended pension provider
As <insert your name> is an independent advisory firm, we are able to choose suitable products
from the whole of the market. Most of the existing pension providers have some form of auto
enrolment offering in place but most of them will be selective about the pension schemes they are
willing to accept in terms of minimum average and/or total contributions and workforce
turnover/stability.
Some pension providers, typically the large master trusts, like NOW: Pensions, have been set up
specifically for auto enrolment and are more likely to accept all employee scenarios. Please note that
employers are subject to a credit check. <insert your name> has completed due diligence on
numerous pension providers in the selection process of a suitable provider.
Based upon your specific requirements and preferences we believe that NOW: Pensions is the most
suitable pension provider for you and your employees. Information about NOW: Pensions and our
reasons for selecting them are given below.
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Auto enrolment solution recommendation – NOW: Pensions
The NOW: Pensions Trust provides a simple online solution for clients to manage the running of
their pension.
It meets most client objectives by providing the following key benefits:









The scheme provides a low cost solution for members. There is a fund management charge of
0.3% p.a. plus an administration charge of between 30p and £1.50 per member, per month.
NOW: Pensions does not exclude staff members due to them having lower incomes or
contribution levels.
Members are not asked to make any investment decisions. Instead, the NOW: Pensions Trustee
Board shoulders responsibility for the investment strategy that is designed to secure the highest
possible return with an acceptable level of risk.
NOW: Pensions has built interfaces with most payroll providers that means they can integrate
their systems without the need for lengthy programming exercises. NOW: Pensions will help
you comply with the guidance set out by The Pensions Regulator.
NOW: Pensions offers statutory communications and innovative administration systems to
ensure a smooth transition into auto enrolment, ensuring compliance now and in the future. It
produces management information reports to provide you with the certainty and clarity that
your employees are being served in the best possible way. It also holds records and produces
reports for submission to The Pensions Regulator when required.
NOW: Pensions offers employee and employer support both during scheme implementation
and after the scheme has been set up.
NOW: Pensions will facilitate transfers both in and out of their pension scheme, which may well
be of value to employees wishing to consolidate previous pension pots into one low charging
one.
The NOW: Pensions scheme offers online access to both employees and employers.
<insert your name here> services and fees have been positioned at a very competitive level,
due to the efficient process and nature of our relationship with NOW: Pensions
Who is NOW: Pensions?
NOW: Pensions came to the UK in October 2011 with a mission to offer something different,
providing a workplace pension scheme that is easy to implement, cost effective and ensures
optimum outcomes for members.
ATP, NOW: Pensions’ Danish parent company, saw an opportunity to create an innovative, member
centric proposition to cater specifically for the needs of auto enrolment. NOW: Pensions was born
with a distinct and differentiated proposition and brand identity.
The NOW: Pensions charging structure and processes mean that it is able to accept all members,
subject to satisfactory checks on employers and all schemes. The same low charges apply to all
employees no matter how many, no matter what their salary or how long they are members for –
whether that’s two months or twenty years.
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Employer charges
NOW: Pensions charges a monthly employer service charge, shown in the table below, that is paid
by the employer. This fee covers setting up the pension, full and ongoing help from a dedicated
support team and all email employee communications.
Employers not using a payroll bureau
Employers using a payroll bureau and
NOW: Pensions microsite
Employers using a payroll bureau and
NOW: Pensions microsite
No. of employees
Discount
Monthly employer
service charge
Any number
N/A
£36.00 + VAT
1-4
65%
£12.50 + VAT
Five or more
44%
£20.00 + VAT
The discounted price for employers using a payroll bureau reflects the considerable support payroll
bureaux provide with auto enrolment administration for NOW: Pensions.
This charge also applies when the scheme start date has been postponed.
Current Clients
NOW: Pensions continues to grow rapidly. Its current numbers as of May 2017 are:
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Circ. 23,000
Circ. 1.2m
employers
members
The number of employers joining NOW: Pensions will continue to grow rapidly as auto enrolment
gathers pace. A small snapshot of NOW: Pensions clients:
Governance
Governance is an important subject for you and all employers with reference to pensions. Good
governance is both an initial and an ongoing process. In the event of The Pensions Regulator taking
an interest in your pension scheme, it’s important to be able to identify a governance process.
NOW: Pensions is an independent, multi-employer master trust. This means that it is one legal
entity, with one trustee board overseeing the interests of multiple employers and their employees.
The master trust structure enables you and your employees to benefit from independent, robust,
high quality governance without the costs that would be associated with establishing and running
your own trust-based scheme.
NOW: Pensions prides itself on its good governance structure and has a Commercial Board
concerned with the day to day running of NOW: Pensions Limited; and a Trustee Board which has a
statutory duty to ensure that the scheme is run in the best interests of members at all times.
The NOW: Pensions Board of Trustees oversees decisions on all crucial scheme issues such as
charges, investment strategy and administration. It closely monitors the performance of the
management team and investment manager taking action to safeguard members’ interests when
required.
The NOW: Pensions’ Trustee Board comprises a wide variety of well-known industry figures with
extensive expertise in their respective fields.
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Nigel Waterson | Chair and former Shadow Pensions Minister
Nigel Waterson was Conservative MP for Eastbourne from 1992 to 2010. He served
as Shadow Pensions Minister for seven years. Nigel was also a long-standing
Chairman of the All Party Group for Older People. He is currently a Trustee of the
International Longevity Centre and is also a member of the Council of the Society of
Pension Consultants.
Jocelyn Blackwell | Founder of Dunnett Shaw and Raising Standards
in Pensions Administration
Jocelyn has over 30 years’ experience in the pensions industry. In 1987 she founded
Dunnett Shaw, a management consultancy that specialised in advising clients on
pension administration processes, systems and outsourcing. The business merged
with Higham Group in 2005 to form Higham Dunnett Shaw, which was sold to Capita
in 2007. Jocelyn was also the founder of the industry-wide body Raising Standards in
Pensions Administration (now PASA) and chaired it for four years. She was the
winner of the “First Woman of Finance Award” in 2005. She is currently NonExecutive Director at Inside Pensions, a specialist firm that provides independent
scheme secretarial services to trustee boards.
Christopher Daykin | Former Government Actuary and prior Chair
of the Institute of Actuaries
Christopher Daykin CB, Hon DSc, MA, FIA, FSA, Hon FFA, was the Government
Actuary of the UK from April 1989 to September 2007. He qualified as a Fellow of the
Institute of Actuaries in 1973. Employed at GAD from 1970 to 2007, he worked for
UK and many international clients on pension fund consultancy, population
projections, social security, national pension policy, pension reform, risk
management and the supervision of insurance companies and pension funds.
Chris is now an independent consultant and has a variety of appointments, including
Chairman of Trustees of the Arts Council Retirement Plan and member of the
Prudential Assurance Company with profits committee. He was President of the
Institute of Actuaries 1994-96 and Chairman of the International Forum of Actuarial
Associations (the predecessor of the International Actuarial Association) 1996-97. He
is currently Chairman of the European Actuarial Consultative Group, the umbrella
organisation for all the actuarial associations in Europe, and Chairman of the
Pensions, Benefits and Social Security Section of the International Actuarial
Association.
Lord Monks | Member of House of Lords and former General
Secretary of ETUC and TUC
John Monks (Baron Monks) is a member of the House of Lords and was the General
Secretary of the Trades Union Congress (TUC) in the UK from 1993 until 2003, when
he became the General Secretary of the European Trade Union Confederation.
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Win Robbins | Former Head of European Fixed Income, Barclays
Global Investors
Win has over 30 years’ experience in the Financial Services industry and holds a
number of appointments. She is Non- Executive Director of City Merchants High
Yield Trust and a Non-Executive member of the St James’ Place Partnership
Investment Committee. She is also a trustee of the Institute of Cancer Research
Pension Fund. Prior to this Win held a number of senior roles in the Asset
Management sector, she was Managing Director and Head of Pan-European Fixed
Income at Credit Suisse Asset Management, Managing Director and Head of non-US
Fixed Income at Citigroup Asset Management, Managing Director and Head of
European Fixed Income at Barclays Global Investors, from which appointment she
retired in 2008.
All Trustees undertake regular training to ensure that they demonstrate the knowledge and skills
identified by The Pensions Regulator.
In April 2013, NOW: Pensions became the first master trust to attain the National Association of
Pensions Funds (NAPF) new Pensions Quality Mark READY Standard. The benchmark shows
employers that NOW: Pensions is a well-governed pension scheme with low charges and good
member communications.
In January 2015, NOW: Pensions reported on its new governance and administration arrangements
in accordance with the new master trust assurance framework introduced by The Pensions
Regulator (TPR) in conjunction with the Institute of Chartered Accountants in England and Wales
(ICAEW). This follows an independent assessment of its control procedures carried out by registered
auditor and assurance experts Assure UK.
The assurance framework (AAF 02/07) was introduced as a quality standard to enable trustees of
master trusts to demonstrate high standards of scheme governance and administration.
Investment solution
For auto enrolment, NOW: Pensions believes any investment solution should be as simple as
possible. NOW: Pensions research revealed that most pension scheme members typically do not
engage with their investments; they expect between 98% and 100% of auto enrolled members will
remain in the default fund. That is a good thing. Unfortunately the majority of DC pension members
who make their own investment decisions do not review those decisions. Those who do review them
will often fall into the ‘buy high/sell low’ trap, resulting in a less favourable financial position than
they would have enjoyed had they remained in the default fund.
Worrying about investment decisions detracts from members focusing on the key issues. By offering
a single solution, NOW: Pensions concentrates its efforts on growing members’ investments,
allowing them to engage with the fundamental questions such as: When do I want to retire? What
do I want to do? And how much should I pay?
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Diversification
NOW: Pensions spreads its investments over a number of different risk classes which they carefully
monitor every day. Diversification has two main advantages:
Firstly, it is extremely difficult, if not impossible, to invest in one area that will consistently perform
well over a number of years. By spreading the investments, there is a better chance of achieving
good, steady investment performance over the time until retirement.
Secondly, by spreading the risk there is a better chance of avoiding big sudden drops in the value of
employee funds which many pension savers may have experienced in the past. Equally this may
mean that there is less chance of benefitting from a sudden gain too.
Growth and protection phases
When it comes to saving for retirement, there are two main phases that need to be considered.
1
2
The Growth Phase
The Protection Phase
The Growth phase focuses on building the fund while retirement is still a long time away. Then
NOW: Pensions slowly moves your employees’ funds into the Protection Phase as they start thinking
about their retirement.
1. The Growth Phase
The Diversified Growth Fund (DGF) is the engine room of NOW: Pensions’ investment strategy and it
is the fund into which your employee contributions will be invested until they approach retirement.
The DGF has an objective to provide steady and secure growth by spreading money across lots of
different areas.
During this period, short-term ups and downs are normal. However, as retirement will be some time
away the focus is on the long-term objective. The Fund spreads money across five different
investment areas which tend to perform differently in different economic conditions. That
diversification helps to drive performance as well as providing an element of protection.
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The five different investment areas are:
Equities
Credit
Commodities
Inflation
Rates
Investing in the
shares of
companies listed
on different stock
markets
Investing in
companies
and some
governments,
in the form
of a loan
Investing
predominantly
in raw materials
and oil
Investing by
lending money to
governments in
exchange for a
repayment that is
linked to inflation
Investing by
lending money
to trustworthy
governments
2. The Protection Phase
As your employees begin their approach to retirement, NOW: Pensions will gradually switch their
investments (as well as ongoing contributions) into the Retirement Countdown Fund. While the
Diversified Growth Fund is the right investment for long term growth, as retirement gets nearer,
it is important to alter the investment strategy. NOW: Pensions do this automatically, they normally
start switching employee funds when they reach ten years before from retirement.
Retirement Countdown Fund
In light of the increased flexibility in the way members may access their retirement benefits which is
effective from April 2015, NOW: Pensions investment strategy is designed to start protecting the
value of employee’s pension fund, and therefore their choices, as they head towards retirement.
The chart below demonstrates the gradual transition into the Retirement Countdown Fund which
invests in Cash Deposits, Money Market funds, short dated bonds with low credit risk, and in interest
rate derivatives in order to reduce the overall level of risk within your pension fund savings.
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Glidepath into retirement
Diversified Growth Fund
Return Target: Cash +3%
Retirement Countdown Fund
Return Target: Cash
Leaving your company’s service
If an employee stops working for you, they can:



Leave their fund in the NOW: Pensions plan
Transfer their fund to another pension contract with another provider or registered pension
scheme
Transfer their fund to their new employer’s pension scheme
No penalties are levied for any of the options selected above.
Tax treatment and law
All statements concerning the tax treatment of products and their benefits are based on our
understanding of current tax law and Her Majesty’s Revenue and Customs (HMRC) practice. Levels
and bases of tax relief are subject to change.
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9. Implementation plan and suggested next steps
As we have established, there are various tasks that you will have to carry out and <insert your name
here> can help you at each of these stages. These can be summarised as follows:








Establish a project plan identifying key tasks, timelines and personnel
Make the application to NOW: Pensions Trust and liaise with them during the set up process
Integrate your payroll software with the pension scheme, to ensure accurate exchange of data.
You must engage with your payroll software provider to establish its auto enrolment process
capability and share with it the NOW: Pensions data requirements
A workforce assessment will be needed to identify your eligible jobholders and the overall
scheme costs - this will be done using your payroll system and our analysis tool
Prepare and carry out an employee communication and awareness program
At your staging date you will need to issue postponement communications to staff members
After the initial postponement period a final workforce assessment will be needed on the
deferral date to confirm who should be auto enrolled into the scheme
Within six weeks of your deferral period (or staging date if you decide not to use
postponement) you need to ensure that all eligible employees are enrolled and non-eligible
jobholders are given the right to opt in.
10. Statement of our fees
<insert your name here> charge a range of fees for installation and ongoing support depending on
employee numbers, the amount of time before you stage and the distance of your firm from our
headquarters.
The fees were discussed during our initial meeting with you and are separated into initial installment
charges and also ongoing support and service charges. The charges are paid by you, the employer,
and are expressed in cash terms. In your case we have agreed fees on the following basis:
Initial charges for the
work described in this
report
=
[£2,500]
Ongoing charges
=
[£175 per month]
The ongoing charges relate to the “Ongoing and potential ad hoc services” within our auto
enrolment client agreement which was shown to you at our initial meeting.
I hope that you will wish to engage our services on the basis of this report, the fees stated above and
our client agreement. If so please sign a copy of this report in the space below and return it to me.
Signature……………………………………………..
Name…………………………………………………….
Position……………………………………………….
Client company……………………………………
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Date…………………………………………………….