Who Are Royal London?
Royal London began as a friendly society in 1861, later changing to a mutual society in 1908. Over the years it has become the UK’s largest mutual life, pensions and investment company.
Royal London are committed to providing the very best experience and pride themselves on delivering standout service and support.
In 2022 its Workplace Pensions and Drawdown products received a 5 star rating from Defaqto. It also received a 5 star rating for its group pensions service for the second year in a row at the Corporate Adviser Awards in 2022.
Royal London Workplace Pension Overview
Royal London’s workplace pension offers employers an easy way to set up a defined contribution scheme for their staff. It also meets auto-enrolment laws and gives your team a head start on retirement planning.
Which Employers Might Need A Royal London Workplace Pension?
Employers of any size, from any industry, can set up a workplace scheme or move an existing one to a Royal London pension.
Before choosing Royal London, it’s important to understand how it stacks up against other providers. Every business has different needs and what’s right for one won’t be right for another.
How Does A Royal London Workplace Scheme Work?
As a defined contribution scheme, both the employee and employer make monthly contributions. This is to help workers save enough for a comfortable retirement.
The contributions are then invested into various funds which are managed by a board of trustees. It’s the trustees responsibility to get the best possible return on the investments.
Who Can Contribute To A Royal London Pension?
The three sources of contributions to a workplace pension are:
- Government in the form of tax relief.
The employee and employer must pay minimum contributions set out by the government. But they can pay more than the minimum if they wish to.
Employees are eligible for automatic enrolment if they are:
- Aged between 22 and the State Pension Age
- Usually working in the UK
- Earning over £10,000 a year.
How Much Can Be Paid Into A Royal London Workplace Pension?
There are set minimum contributions that employers and employees must pay into a scheme.
Employer Pension Contributions
No matter the number of staff, every employer must contribute at least 3% of the employee’s qualifying earnings into their pension fund.
But they can contribute above this. Some employers offer a higher contribution as part of their employee benefits package.
Employee Pension Contributions
Employees are required to pay a minimum of 5% of their qualifying earnings into their workplace pension. The government pays 1% of the 5% as tax relief into the pension.
Do Royal London Allow Employees To Transfer Other Pension Pots Into The Scheme?
If an employee has savings in another pension, they may be able to transfer some or all of it to their Royal London scheme. Royal London won’t charge to transfer funds, but the previous provider may charge an early exit fee.
It’s important to note that combining pensions won’t necessarily offer more money as the value of the funds can fluctuate. Members can also transfer from a Royal London workplace pension at no charge. Royal London may impose an early exit fee, though.
When Can Employees Access Their Royal London Workplace Pension Fund?
Employees cannot access their workplace pension until they are 55. Once they reach 55 years old, they can access their pension even if they are still working.
They can choose to either take it all as a cash lump sum, dip into it when they want to, or use it to buy a secure income. However, if an employee takes a portion or all of their savings before retirement, they will have less or even nothing left by the time they retire.
What Happens To A Royal London Pension If An Employee Dies?
Employees have to nominate one or more beneficiaries who will get their savings if they pass away before their retirement. If the scheme trustees approve the request, the beneficiaries will get the employee’s money when the employee dies.
Where Are Contributions To Royal London Invested?
Contributions to a Royal London pension are invested so that they grow over time. The aim is to help employees build up a substantial pot of money that they can then draw on in their retirement.
The contributions go into Royal London’s default fund, which is the Balanced Lifestyle Strategy. The fund’s asset managers will oversee this. There are other funds, though, including:
- Governed Range
- Lifestyle Strategy
- Fund Range.
Royal London’s default investment strategy offers a balance between risk and return. The money is invested across equities, which are shares in global companies. The pension pot is also invested in UK property and used as loans to companies and the government as bonds.
Fund Investment Companies
This strategy limits risk and gives the savings the best chance of increasing in value. There are ten key companies that the Royal London default fund invests in. These range from technology and manufacturing to pharmaceuticals and consumer goods:
- Taiwan Semiconductor Manufacturing
- Rio Tinto.
Royal London’s governed funds range offers ready-made options if an employee wants to move from the default fund.
There are nine available options for staff to choose from. But the best funds for them will depend on how close they are to their retirement and their attitude to risk. Fund managers will ensure the investments are balanced in line with these factors.
An alternative to the default fund is one of Royal London’s lifestyle strategies. But it depends on the level of risk the employee is prepared to take. Employers can also build their own personalised lifestyle strategies for their workforce.
If employees want more control over how their funds, they can move their savings to Royal London’s fund range.
Employees can pick their own investments from across 160 funds. 120 are external funds and 40 are internal. These are managed by fund managers, giving an employee more diversity in where their money is invested. This allows staff to cater their funds to their individual circumstances.
Who Manages Royal London’s Investment Funds?
Once an employee starts making contributions, Royal London’s fund manager will oversee the investments. This aims to ensure they perform as expected and provide a good return for retirement.
Is Royal London's Workplace Pension The Same As A State Pension?
No, workplace pensions like Royal London’s are separate from the State Pension. Employers and employees both make contributions rather than it being paid for by taxpayers.
Can Employees Opt Out Of A Royal London Workplace Pension?
Employees can opt out of their workplace pension after automatic enrolment. They will have to give their employer a formal opt-out notice to confirm this decision. Employer contributions will stop, and so will the employees.
Any employee contributions already made will be refunded if they opt out within the first month of auto-enrolment. Employees can opt back into the scheme later on, provided they still meet the eligibility criteria.
What Happens If An Employee Leaves?
If an employee leaves the company, the employer will stop making contributions to their pension. The employee can then:
- Continue making contributions into their pot
- Stop contributing and leave the savings invested where they are
- Transfer their pension pot to another scheme.
Is A Royal London Workplace Pension Worth It?
Like with most pension plans, there are pros and cons to Royal London’s scheme to consider first.
Advantages Of The Royal London Workplace Pension
As the UK’s largest mutual life, pensions and investments company, it has become an established, well-known and trusted brand. Royal London manages funds of over £130 billion, has 8.8 million policies, and over 4,000 employee members.
Choice Of Investments
Royal London’s workplace pension offers a choice of bespoke and ready-made fund options. This means you can set up a scheme that suits the needs of your employees, as well as yours as an employer.
Dedicated Implementation Team
Employers can access an on-hand support team to help set up the scheme and ensure it runs smoothly.
Online Services And Financial Tools
Royal London provides an easy-to-use ‘Employer Online Dashboard’ to help you run your scheme. Within the dashboard are many useful tools and all the information you need to stay on top of your duties.
Staff will also have access to a pension platform where they can log in and review their savings. This allows them to prepare for retirement and improve financial wellbeing.
Free Pension Transfers
When it comes to transferring pensions, Royal London doesn’t charge for moving the scheme to them.
Disadvantages Of Royal London Workplace Pensions
Pension Fund Costs Unclear
Unlike other providers, the charges of Royal London’s workplace pension are unclear for those who aren’t pension experts.
Administration And Transaction Fees
Royal London will apply admin charges directly to the employee’s pension. This is to cover the costs of managing their pension and investing the savings. Royal London will decide and confirm these charges. So, it’s important to clarify what these are before setting up a workplace pension.
A transaction fee will also apply to the employee’s pension, which covers the costs of buying, selling and holding assets within Royal London’s funds.
When choosing a workplace pension, it’s important to compare providers as the options and fees will differ. The right one for your company will depend on your specific needs.
Best Alternatives To The Royal London Workplace Pension Scheme
Whether you’re a small start-up or a multi-national business, choosing a workplace pension is a huge responsibility.
You’ll need to compare factors such as costs, accessibility, eligibility, investment options, and flexibility.
Alternative Workplace Pension Providers
While Royal London is one of the most popular workplace pension providers, they’re one of many worth considering, including:
- NOW: Pensions
- People’s Pension
- Scottish Widows.
Our expert in-depth review of each of the UK's leading corporate pension providers
Compare Workplace Pension Providers & Get Expert Advice
Choosing and setting up a workplace pension scheme is neither a simple nor quick task. But we can help to make it as seamless as possible. We are experts in corporate pensions and taking the stress out of setting up a workplace pension scheme is one of our specialities.
With your workplace pension taken care of, you can get back to focusing on what you do best–running your business.
If you’d like our expert guidance on your workplace pension, don’t hesitate to get in touch with us. You can call our team on 02074425880 or email us at email@example.com.
Why Speak to Us?
We started Drewberry™ because we were tired of being treated like a number.
We all deserve a first class service when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to talk to us.