Printing scheme uses AE to trim 5bp off member fee
The Printing Industry Pension Scheme has used auto-enrolment to negotiate a reduction of 5 basis points in its flat fee for members, as the industry looks for ways to lower charges.
The launch of auto-enrolment and increased competition in the marketplace has led to more competitive pricing among providers.
Printing Industry Pension Scheme: key stats
- The scheme has funds under management totalling £123m.
- It has around 120 participating employers.
- There are about 6,000 active members.
- Most of its employers will auto-enrol between 2015 and 2017.
It has also pushed more employers to market-test their schemes to ensure the arrangements they have in place are good value.
PIPS, a multi-employer scheme with around 120 employers, revealed in November 2011 that it planned to use an expected surge of employers from auto-enrolment to renegotiate its 0.85 per cent fee to provide a better deal for members.
At the time, scheme secretary Barry Dixon said it was planning to raise the issue with PIPS’ advisers, with the aim of persuading the scheme’s providers to lower their charges.
This has now been achieved, with PIPS negotiating a lower fee of 0.8 per cent, it reported. Saq Hussain, head of defined contribution consulting for the north at PwC, said a number of employers were using auto-enrolment as an opportunity to “sense check” their scheme.
“For a provider that has got, say, 30 per cent of the take-up, what support [employers] need from providers might be very different if they have got 89 per cent of employees in their scheme,” he said.
“Initial charges might have been set up around five or 10 years ago, and in that time the market prices have generally come down anyway, so I think that has been a driver [for companies to renegotiate].”
The National Association of Pension Funds’ Pension Quality Mark outlined tougher standards earlier this year, lowering its cap on charges from 1 per cent to 0.75 per cent.
Hussain said moves like this, along with the bar that the National Employment Savings Trust has set with its annual charges, has pushed the industry to reconsider its offerings.
Heather Brown, investment partner at consultancy LCP, said it encouraged clients to consider whether circumstances have changed since appointing a provider.
“We regularly suggest that they have three-yearly reviews anyway in terms of their fees. It is about looking at things like if your current scheme is likely to become your auto-enrolment vehicle, and whether there are likely to be more assets [coming] into the scheme,” she said.