At a recent conference on Automatic Enrolment there was a great deal of discussion on what happens when the smaller employees begin to stage their workplace pensions.
The feeling was one that the smaller employers will not look at the pension provider and many will by default fall into NEST, looking to minimise the cost to their business. This is a completely valid course of action and with minimum contribution rates at 2% likely to make little difference.
However, if we fast forward by a few years and the overall contribution rates hit 8% that becomes a significant figure. Given there is no statutory requirement for an employer to describe why they have chosen a particular pension fund as their provider of choice the consensus was that employees in the not too distant future will be asking why the decision was made regarding that provider and was consideration given to the investment strategy, returns and charges.
While the employer has no statutory obligation to explain the rationale for the decision we wonder how long it will be before there will be uproar and another potential pension scandal.
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