Employers will have to offer pensions The Government has announced that all UK employers will have to offer their staff a pension with the changes being phased in from this current year, 2012, The new rules, which will lead to many people saving into a pension for the first time, will apply to every employer regardless of how many workers it employs. It had considered exempting firms that employ four or fewer people from the new requirements, but has decided that the rules will apply to all employers, including self employed people and partnerships who employ staff and limited companies. The announcement follows an independent review on auto-enrolment, which was launched by the coalition Government in June 2010. Employers who do not offer their own pension scheme will have to enrol their workers into the National Employee Savings Trust (NEST), a low-cost scheme set up by the Government, or set up their own scheme to enable them to opt out. Employers will however, be able to wait for three months before staff are enrolled into a pension scheme, to allow for those firms who use seasonal workers on a temporary basis. The amount people have to be earning before they are automatically enrolled has also been increased from £5,035 under the previous government's proposals to £8105 - in line with the level at which income tax is paid (2012/13). This lower limit may change over time. Other measures to help employers manage the changes include simplifying the process for firms to show that their pension schemes meet the minimum standards required and further measures to reduce the red tape surrounding pension schemes. Auto-enrolment will be gradually introduced between October 2012 and February 2018, starting with large employers, followed by medium ones and finally small businesses and companies set up after April 2012, although firms can bring it in sooner if they wish. These are known as the staging dates. Contribution levels will also be built up gradually, and will initially be set at a minimum of 2%, of which 1% will come from the employer, rising to a total of 5% by September 2017, 2% of which will be paid by employers, and increasing to the full 8% by October of that year. The UK is about to enter one of the biggest changes affecting Employers & Employees; this is known as Pension Reform 2012 and is something which every one involved in running a business should be aware of. The Insurance Industry is preparing itself for massive change as Pension Regulation is amended to encourage long term savings for the aging population across the country. It is anticipated that over 750,000 businesses within the UK do not currently meet the criteria set out by Pensions Reform. Therefore, please consider carefully the following questions: - A) Have you heard of the National Employee Savings Trust (NEST)? B) Are you aware of the cost implications NEST will have on your business? C) Do you understand the impact these changes will have on your business and on your employees? The Pension Reform 2012 changes are not optional. You, as a business must implement them and administer them for all employees from your staging date. Please ask us to help you clarify when this will apply to you. One thing we can say with certainty is that these changes will have an affect on your business and if you have answered ‘No’ to any of the above questions, we at Armitage & Young can help you manage and understand the implications Pensions Reform 2012 will bring. We can work with you to plan for the future to mitigate the potential costs and make you compliant in respect of the new rules governing Pension Reform. We have updated this page to reflect the changes announced in February 2012. To find out more and how we can help, please contact us on 01484 666718 to arrange a meeting.
Armitage & Young Investment Management Ltd. is an Appointed Representative of Sesame Ltd which is authorised and regulated by the Financial Conduct Authority. Sesame is entered on the FCA register (www.fca.org.uk/register/) under reference 150427. The FCA does not regulate loans, commercial mortgages, Will Writing and some forms of school fees planning and inheritance tax planning. Information on this site does not constitute personalised advice. Always consult us as professional independent advisers before taking any action. The advice and/or guidance contained within this site is subject to the UK regulatory regime and is therefore targeted at consumers based in the UK.
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