Archive for the ‘Pensions’ Category

Too soon for Workplace Pension reform?

Wednesday, October 5th, 2011

With the economy growing far slower than expected and inflation being so high with no potential for an increase in interest rates, I don’t believe the government should be introducing Workplace Pension reform from 2012. The potential knock on effects to the economy could be substantial because it will severely reduce the disposable income of many UK citizens. For those who are unaware of the new rules, the legislation will look to make all employed people pay up to 4% of their earnings into a pension scheme and their employer will pay a further 3%. This will mean that they take home 4% less each year and if their company has to pay into many pensions then this could mean that there would not be a pay rise offered in the same tax year.

Therefore the overall effect of these new rules on people’s available cash will be significant. Although there will be the option to ‘opt out’ of these payments, which many people will do, there is no doubt that the overall effect on the UK economy will not help it achieve the predicted growth figures which it needs I order to get out of debt as quickly as anticipated.

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More warning for Workplace Pension would have been good

Wednesday, October 5th, 2011

Pension legislation is being introduced from 2012 which will change Workplace Pension procedures in a big way, and personally I don’t think the government has done enough to advertise exactly what will be happening and when. I work in HR and it has been my responsibility to assess what the changes are, how they will affect our company and when we need to do something. I decided to search the internet and luckily I found a very good firm who look to review workplace pension schemes and set up new ones where appropriate. There seems to be many issues which need to be considered, such as when each specific company has to start paying into a pension for their staff, how much they have to pay in at first and how much in a few years, and what options have their employees got if they don’t want to pay into a pension plan.

One of the most important issues from our point of view is that our company can be fined up to £10,000 if we don’t pay into pension plans for our staff and we need to have a compliant reporting process so that we can prove what is being paid and when, who has opted out after the auto-enrolment process and so on. These details should have been advertised by the government sooner as many companies may be unprepared.

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Do I have Options for a Workplace Pension?

Wednesday, October 5th, 2011

My firm does not currently offer a workplace pension scheme, but I hear there are going to be new rules introduced from 2012 which will ensure that they pay into a pension on my behalf. However I already have a pension scheme at the moment so I was wondering how this would be affected. I currently pay £60 per month into a personal pension, which is around about 3% of my salary. The pension plan has done fairly well so I don’t particularly want to change it or stop paying in, but I was wondering what my options would be. Ideally I’d like my company to pay 3% into a pension plan for me and I continue to pay 3% into my existing plan, and if my company would agree to make that payment into my existing pension plan.

If my company refuses to pay into my existing pension then it can pay into its own plan but the problem would be if I continue to pay into my plan but don’t want to pay into their plan I would have to ‘opt out’ of the auto-enrolment. This would mean that my company are not legally obliged to pay into the pensions either.

If believe I have this right but if anyone else has thoughts on this I’d be happy to hear them

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What are the changes to workplace pensions from 2012?

Friday, September 16th, 2011

You may have heard about government legislation that will be introduced from 2012 but the details do not seem to be common knowledge. New Review site, Workplace Pension, have put together a breakdown of the new rules which will affect all companies and their staff over the next 5 years.

The basic intention is for all employers to pay into a workplace pension on behalf of their employees. There will also be a requirement for all members to make a contribution to their plan aswell. The aim is for people to fund a pension scheme in order to provide a sufficient income in retirement.

Employees need to be between 22 years old their state pension age and earn over £7,475 per year to become eligible for auto-enrolment, where the company has to pay into the plan on their behalf and if the member does not want to be part of the scheme then they have to actively ‘opt out’. Similarly if a person does not qualify as en eligible member then they can opt into a workplace pension scheme but their employer would not be required to make a contribution aswell.

Administering the pension schemes could be the biggest difficulty for employers because they have to ensure their paperwork and reporting duties are compliant in the eyes of The Pension Regulator (TPR). Employers need to keep a record of the members of staff who are eligible to join the scheme, documentation to show that all members were automatically enrolled and a log of those who have chosen to opt out.

Workplace pensions are changing and the impact on companies, individuals and the UK economy could be significant. The best advice would be to ensure you are prepared for your responsibilities from 2012.

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