XPT helps save money on former-employee pensions

Xafinity has advised that employers could save up to GBP100 per former employee each year - up to GBP4,500 per individual throughout their pension-scheme membership.

Xafinity warns that many of the 54,000 trust-based defined contribution schemes in the UK now have more deferred than active members.

It states that there will soon be more than one million such former employees, whose benefits will generally cost between GBP50 and GBP100 per annum to look after - none of whom contribute to the success of the organisation.

Xafinity predicts this problem will accelerate due to growing staff turnover, the growing popularity of salary-sacrifice arrangements (which often prevent refunds of contributions for short service leavers), and the introduction of auto-enrolment in 2012.

Xafinity believes that many employers could save hundreds of thousands of pounds each year, without compromising members' retirement benefits.

Ken Anderson, principal consultant at Xafinity, said: 'To date, options for employers to mitigate the costs of deferred members have been limited, complex and cumbersome.

'Employers have either tried to pass costs to deferred members, which is illegal, or transfer benefits to insurance policies, which can reduce retirement incomes by more than 50 per cent, cut valued tax-free cash benefits by up to 75 per cent and significantly reduce with-profits investments.

'Pension-scheme trustees have often, justifiably, blocked such "solutions".

'Transferring deferred pension benefits to the Xafinity Pension Trust is straightforward, freeing the employer and trustees from any further expense or compliance burden.

'The process adopted ensures that members' benefits are not adversely affected at the point of transfer and provides members with valuable investment and retirement support to assist their pension planning,' he added.

Xafinity Pensions Trust (XPT) is a multi-employer trust-based arrangement, with one set of trustees and administrators overseeing all participating employers' pension benefits.

Employers can decide to retain a link to former employees, or pass the full responsibility for the members to XPT.

Employers and trustees can obtain a complimentary report from Xafinity, which will assess the savings that they could achieve by transitioning to XPT.

Back to top