Submitted by Sestini & Co
| on Wed, 10/15/2014 - 10:28 | In Uncategorized
You will undoubtedly have seen Pensions Auto-Enrolment in the news recently, but do you know how it will affect you? If you are an employer or an employee, read on…
Put simply, auto-enrolment will mean that employees are automatically enrolled into a pension scheme into which both they, their employer and the government will all contribute.
This means that employers will legally need to automatically enrol certain workers into a pension scheme and make contributions towards it.
There are some exceptions:
- Those who already save in a workplace pension scheme or are self-employed may be able to remain in their current plan
- Those earning less than £8,105 a year will not be automatically signed up
- Workers under 22 or over state pension age will need to opt in
- Part-time workers who earn less than £8,105 can ask to take part if they want to
- Staff must be given a letter about the scheme when it starts at their workplace. This will explain who the pension provider is. Workers can ask this provider for an opt-out form. If they fill it in within a month, then their involvement will be cancelled
For companies with over 50 staff the scheme should already be running. Those with 30-49 staff have until October 2015, and those with fewer than 30 staff have until April 2017 for it to be implemented. Newly established firms must have their staff enrolled by February 2018.
In general the auto-enrolment scheme will have a positive effect for millions of people who may not otherwise have set up a pension and the contributions made by the employer and the government will mean an employees contributions are matched thereby doubling the amount paid into the pension pot and even could potentially more than double the employee contribution.
But there are some things to consider:
- As an employee for example if you join an existing defined-contribution scheme, you could face very high charges and poor investment returns
- As an employer there will be additional admin and tracking as well as financial planning to be done to include the extra cost of the pension contributions
And this is where we can help – we can provide support both in terms of processes and appropriate software for employers, as well as offering advice for employees. We are working closely with a pensions qualified financial advisor to ensure we can help you with any questions you have about auto enrolment so please do not hesitate to get in touch if you want to know more.