What’s it all about?
People are living longer and are likely to enjoy a longer retirement. But many people are not saving for their retirement at all, and many who are saving aren’t saving enough.
The Government will bring in new laws this year that aims to give more people the chance to save for when they retire. However, this will have a significant impact on every employer in the UK.
What are the rules now?
Currently, employers must offer at least a Stakeholder pension for their employees but are not obliged to make contributions.
Under new legislation, employers must automatically enroll eligible employees into a qualifying workplace pension scheme and as an employer you will be required by law to make a contribution towards it.
When will this happen?
Depending on the size of your business, the law will come into force between 1st October 2012 and 1st April 2017.
What if I already operate a company pension?
You will still have some new obligations to ensure they meet the required standards.
What contributions will I have to make?
You must contribute at least 3% of your worker’s earnings, although you can choose to pay more if you wish.
The worker will be responsible for paying the rest. They will get tax relief on their contribution and the total combined contribution will be a minimum of 8%.
What is NEST?
NEST (National Employment Savings Trust) is a Government Scheme set up to provide a solution to auto-enrolment for those who have not, or will not, make their own arrangements. There will be certain restrictions applying to NEST including:
- A general ban on transfers in or out.
- Limited retirement options.
- Limited investment options.
Are there alternatives to NEST?
Yes. You do not have to choose the option provided by the Government Scheme. There are many options available for employers and which one you choose depends on your individual requirements.
To assist you, we are offering consultations to all employers including step-by-step guidance on how to meet your obligations in the most effective manner and potentially reduce the impact of these changes on your business.
Our employer consultations are completely free of charge, no strings attached.
Written by the advisers on the If you have any questions regarding the article, please contact the advisers, at GreenSky Wealth Ltd on 01603 340800.