Why you should set your single director company clients up with a work place pension scheme before it's too late. . . 

The auto enrolment requirements for single director companies are not as clear as they could be if you don't know the AE market.

While they don’t necessarily need a pension scheme setting up, understanding the implications of not doing so will offer them more flexibility in the future and also save them or their staff money. 

There are some important details to be aware of and these details suggest it is worth setting up a scheme regardless of whether they are currently required to or not.

So, before they inform the The Pensions Regulator (TPR) and decide not to set up a workplace pension scheme, they should consider the following. 

All UK companies have been allocated a staging date by TPR. Once this staging date has passed, companies that subsequently take on employees are required to have a work place pension scheme in place for their staff. Simply put, single director companies must have a scheme if they ever take on an employee. 

While many single company directors in this situation choose to set up a work place pension scheme only after they hire someone, they often find that this happens once their business is beyond their staging date. A business’s staging date is fixed meaning if the business hires a member of staff after their staging date their options going forward, particularly in relation to which pension provider they can use, are limited. 

Only a certain number of pension providers will accept new schemes from businesses that have passed their staging date. These Pension Pension providers tend to have high up front fees or ongoing fees for the life of the scheme, plus even charges that affect their staff. Therefore they should not get forced into a scheme that isn’t right for their business or their future workforce.

It is also worth pointing out that the annual management charges on a work place pension are around a third, sometimes even a quarter of the charges associated with a normal pension. Consequently, if a single company director  is paying into a normal pension now it is a very inefficient mechanism for saving and in most cases are better off having a workplace scheme. 

AEclipse is well positioned to help single director companies. Our low cost ensures directors feel comfortable keeping their options open and value the support and flexibility we offer them. If their company expects to grow it’s a sensible decision to deal with auto enrolment in a proactive way before it is too late. 

Give us a call for a no obligation quote as your clients will appreciate you looking out for them.

Pete Avery | Director


ServicesPaul Caputo