Five reasons why companies should set up their own pension scheme

If you’re a UK start-up or a smaller business, you’ll be glad to know that you have an extra piece of company admin looming in the next year or two: you’ll be required, by law, to set up a workplace pension and offer it to all eligible employees. Just what everyone needed!

By way of background, you’re being asked to pay into a company pension because the Government launched ‘auto-enrolment’ in October 2012. It did this because it was concerned that people weren’t putting enough aside for their retirements — and would therefore be excessively reliant on the state to provide for them. At a time when people are living longer and longer, putting even more pressure on the state, this clearly isn’t sustainable.

Auto-enrolment is something that all UK employers will be offering – by law – by 2018. It started back in 2012 with the largest companies having to comply first, followed by medium-sized employers. Now it’s the turn of small and micro businesses, of which an estimated 1.8 million are expected to ‘stage’ (this is pensions speak for ‘offer a workplace pension’) before 2018.

Now the thought of setting up a pension may well make you wince. It will surely be time-consuming, expensive — all the more so if you’re bootstrapping — and generally a pain in the backside. Thankfully, it doesn’t have to be. Technology has once again saved the day and means you can set up a fully compliant workplace pension in as little as an hour, free of all the usual unfathomable jargon and general confusion.

So what’s in it for me – why should I set up my own pension scheme?

1. You’ll save lots and lots of money

Setting up and running your own pension scheme can be great for your bank balance. Why pay someone else to do something for you when you can do it yourself? Firstly, you can save on the often steep set-up fees and costly advice. But you’ll also find it’s cheaper to run it yourself after you’ve set it up. There are a handful of tech-led auto-enrolment platforms on the market to choose from that allow smaller business owners to set up a fully compliant workplace pension scheme themselves at no little cost. In short, a bit of research online can save you a lot of money.

2. You’ll save time — and again, lots of it

It no longer has to be a time-consuming and painful exercise to set up a pension. Technology means it’s now a very quick process. In our experience, smaller companies with simple requirements really can be up and running in just a few hours - sometimes in as little as an hour. So yep, with some of the tools out there today you can set up a workplace pension in your lunch hour. And then you can sit back and wonder what all the fuss was about.

You’ll also save even more time once it’s up and running. If a system is fully automated, employees can access their own account and make changes, so you don’t need to do the legwork. This could be managing their pension contributions from month to month or taking a payment holiday. The technology is designed for time-pressed business owners and companies for whom tech is not a problem. It keeps the administration to a minimum so you can focus on more important things - like actually running your business.

3. This is all now possible due to technology – so take advantage of it

These days, APIs and other technologies exist that take a huge amount of legwork out of setting up a workplace pension. One such example is the NEST API, which enables small business owners to effortlessly link up to the Government-backed workplace pension scheme. It can be done with the click of a button. NEST will then send you (or whoever you nominate) an email so that your account can be confirmed and a Direct Debit set up to make the pension contributions automatically each month. However, we’re technologists not pension advisers, so by all means do your own research.

4. It’s much easier than you think

When most people think about pensions, they almost certainly imagine a scenario that’s hugely boring, complicated and a hassle. But the technology available today takes care of all that behind the scenes, making it simple to set up and run. In fact, one of the main reasons why businesses are procrastinating is the perceived amount of work that setting up a workplace pension involves. Business owners want to know they are compliant but with the minimum amount of fuss. Once you realise how straightforward it is, you’ll wonder why so many other businesses are paying other people to do it for them.

5. It will give you more control over your business

One or two of the new tech-led pensions platforms give your staff access to their very own portal where they can view all their pension — and in some cases, payroll — information online. Within it, they can find out all sorts of information on what the new workplace pension means to them, opt in or out directly. Business owners are also kept in the loop at all times and fed all of the monthly (or weekly) changes back via their own online dashboard. This means they stay up-to-date with what their staff are doing on the pensions front but don’t have the hassle of the admin.

All in all, with the technology-led pension platforms out there today, you can get much closer to the pensions coalface and can gain a greater understanding of how your business works. It’s a bit of a revolution where pensions are concerned, really. You can make changes on the fly, log in from any device anywhere, and effortlessly add a new team member. Realising you can do previously complex things like pensions and payroll yourself is really quite empowering. Why give that power – and knowledge – away to someone else?

Catherine Pinkney is the Co-Founder of Paycircle