The Government have already begun the new pension reform. This gives employees an opportunity to save more for their retirement and maintain a more similar standard of living when they retire as they have grown familiar with whilst in employment.
This video from the Telegraph gets the idea of the pension scheme across well:
From this video you can get a good understanding of why the pension reform is taking place, but what implications does this have on you as an employer? What responsibilities do you have within this new scheme?
At the moment, there are no official regulations on whether you should provide a pension to your employees however it is now your responsibility to understand, communicate and offer the new automatic enrolment pension to your employees that qualify for a UK pension. As long as you have hired at least one employee, you will need to know what this new pension scheme is all about.
The new pension itself provides employees with an increased input into their pension. The increase comes from both you and your employee as you are both expected to put an input of cash into the employees’ pension. Above this, the Government will also make a contribution to further increase the size of the pot. This will start from as little as 1% of an employee’s wages which will be due to rise to about 4%.
There are a few conditions which an employee will need to fulfil before being entered into auto-enrolment:
If you already have an existing pension scheme for your employees, you may not be required to change anything. However, you will need to ensure your pension scheme matches to the new one otherwise you will be breaking the law. An informed accountant can help you out with this.
When you need to change over to this auto-enrolment pension scheme depends on your number of employees and business size. Larger companies have already begun enrolling their staff in the new state pension rules and soon it will be your turn to follow suit. If you want to figure out exactly when you need to enrol your staff, and have your full PAYE reference number, you may be useful to visit the pensions regulator site, or ask your accountant for more details.
There are many articles such as this one prescribing to visit sites containing guides such as The Pensions Regulator but we suggest you ask your accountant for advice on how to best go about changing your pension rules to fit the new scheme.
Just Accountants is a free to use service which can provide you with up to four quotes from accountants tailored to you business requirements and personal expectations. This includes being knowledgeable about the New Pension Scheme and helping you deal discover exactly how much extra it will cost, what to tell your employees and when you do or do not need to keep official legal records. Follow this link to our call back form and our experts will soon be in contact to provide you with an accountant you need.