Government Pensions Reform - The Lead up to 2012
From 2012 the Government are introducing "Personal Accounts". All businesses will be required to automatically enrol their employees and make compulsory employer contributions, which will be phased in from a contribution level of 1% to 3% of salary over four years. The Government's aim is to incentivise workers to add their own contributions and save for their eventual retirement.
Personal Accounts will be a 'National Pension Savings product', meaning there will be no provider or intermediary support to call upon at a time when a greater burden will be placed on the employer.
To emphasise the importance the Government places on the new legislation, employers will be subjected to fines imposed by the Pensions Regulator for non-compliance.
Personal Accounts are being introduced as simple low-cost schemes with limitations on investment choice and contribution levels, allowing lower paid workers to save for their retirement.........but are they suitable for all employees? Consider the profile of your workforce. These inflexible schemes are unlikely to appeal to moderate to higher earners who require more choice and control over where their contributions are invested and the ability to save more towards their retirement.
Is there an alternative?
Yes, the Government recognises that employers may, as an alternative, wish to set up or maintain their own scheme arrangement with a pension provider of their choice. As long as the scheme meets the qualifying criteria, then the employer will not be required to run a personal account in addition to their existing arrangement.
SKD Financial Services has an excellent reputation for assisting companies with setting up and maintaining staff pension schemes and because we're independent financial advisers, we can provide you with genuinely impartial advice. We are able to help you choose from all of the available products in the market, so that we can find the one that best suits your business and the needs of your employees.
Setting up your own qualifying scheme or ensuring that your existing scheme meets the qualifying rules means that you can attract and retain quality staff by providing them with good company pension scheme provision and more flexibility.
If you need help in understanding how the changes will impact on your business and how best to prepare for them then please contact us for a free initial consultation - we're happy to help.
