Monday 30 June 2014

PENSIONS ALREADY CHANGING IN THE WORKPLACE

The compulsory “Workplace Pension” is already changing how employers and employees deal with pensions.


The law requires that all employers set up a pension scheme into which their employees and the employer have to contribute. It is a worthwhile effort to get people planning for their post-retirement financial security. This process is already in place for the largest employers in the UK and over the next three years, the process will gradually work its way down (based upon the number of employees) until it reaches those employers with only a very few staff.
This is something of a return to the past where employers had good pension schemes and employees had no real choice about joining. Those schemes generally provided a reasonable pension at retirement age. The Workplace Pension is nowhere as good but it is a step in the right direction. Note: The Workplace Pension changes do not apply to the self-employed or one-man limited companies.


Monday 23 June 2014

The Employee’s Right to “Unjoin”!


An employee who qualifies for Automatic Enrolment has to be enrolled into the company pension scheme, but the employee then has the right to Opt Out and cease to be part of the company pension at any time! The employer, however, must not do anything to encourage the employee to opt out, e.g.
provide an incentive for opting out.








What Will It Cost!
The level of contribution by the employer and employee will be phased in over the next 4 years. The required contribution levels are approximately as follows:
Date                               Employer (%)           Employee (%)                     Total (%)
Oct 2012 to Sept 2017           1                                 1                                           2


Oct 2017 to Sept 2018           2                                 3                                           5


Oct 2018 onwards                  3                                 5                                           8

Monday 16 June 2014

The Employee’s Viewpoint – An Enforced Pay Rise



An employee will benefit from the enforced employer’s contribution but will also have to
make their own payment into the pension.
In the long run an employee will benefit from this mandatory savings process.
If you are an employee, you will fall into one of the following categories:



Eligible Jobholder


Non-Eligible Jobholder


Entitled Worker

The vast majority of employees will fall in the category of “Eligible Jobholder”, i.e. those aged between 16 and 74 and earning in excess of £10,000 per annum. These all must be compulsorily enrolled. Those who fall outside of that age range or income level, will come under one of the other two categories. They do not have to be compulsorily enrolled but will have the option to join the pension scheme voluntarily.

Note: If the only employee(s) being paid on PAYE are directors of their own limited company, they will not have to set up an Auto-Enrolment Pension or be compulsorily enrolled.



Monday 9 June 2014

The Employer’s Viewpoint – A Pain in the Proverbial!



If you are an employer and have any staff that you pay on a PAYE basis, you will have to set up a company pension scheme and both you and your staff members will have to contribute to their pension.
All the costs of setting up the pension and running it have to be paid by the employer, along with the company contribution made into the employee's pension.
The new legislation came into effect in October 2012 and is being phased in – with the largest employers having been first to have to set up their pension scheme. In the current year (April 2014 to April 2015) those companies with between 50 to 250 staff will have to set up their Auto Enrolment Pension.


Those with fewer than 50 employees will be given “Staging Dates” (their starting dates) between 2015 and 2017. An employer has no choice about this and there are significant penalties for failure to set up the pension scheme and to ensure it runs properly.


Those companies large enough to have dedicated accounts staff will find that the procedure can usually be linked to the existing PAYE process but there is still quite a bit that will have to be done by the employer – including choosing the pension provider they will use and establishing the required procedures and communications to staff. Where there is already an existing company pension scheme, it will have to be reviewed to see if it can be used as it is, or whether modifications will have to be made. It is estimated that an employer should begin dealing with the Auto-Enrolment process 6 to 12 months before the Staging Date, which is when the pension has to be up and running.


We will be offering an advisory service for employers with up to 50 staff. Contact us for details.


Monday 2 June 2014

A Pension Evolution (Revolution) ?

Ignoring the Budget announcement for a moment, the largest change in pension legislation for many

decades is already coming into effect. While we are told we live in a democracy, it hardly comes across as democratic when a Government can create a law that forces employers and employees to set

up and pay into a company pension. This development goes back to 2006 when serious concern was raised about the fact that a large proportion of the working population were saving little or nothing

towards their retirement needs. The Government could read the handwriting on the wall. They introduced the Pensions Act 2008 which established the principle of compulsory enrolment, i.e. that all companies had to set up a company pension and that all employees would be required to join it – with both the employer and employee being required to contribute to the employee’s pension. The Pensions Regulator is the governmental body responsible for company pensions, and they are the ones responsible for ensuring that all employers set up these Auto-Enrolment Pensions.


Note: This law applies to employers and employees but not to those who are self-employed.