Steve Foster / Feature Articles


Pensions & Automatic Enrolment

pensions and retirementPensions have had bad press in the recent past and so a great number of people had decided not to participate in their company schemes or for the self-employed had decided not to set a scheme up.

The Government has been addressing this and has started to make pensions a more attractive proposition by offering greater flexibility to the schemes and reducing the level of taxes on pension drawdown.

The Government has also introduced Automatic Enrolment, this is where every employer with more than 1 employee has to set-up a workplace pension scheme and automatically enrol its employees (there are some exceptions).

You may already have a company pension scheme in place but you still need to check that it’s suitable for automatic enrolment.

So what does automatic enrolment entail ?  Well there are a number of stages, the first of which would be to select which scheme is going to be used by your company.  There are a number of automatic enrolment providers such as The Peoples Pension, Now and NEST and there are your usual pension providers such as Scottish Widows, Scottish Life etc.  Each provider has its own strengths and weaknesses and so you should consult with your financial advisor prior to selecting.

You should find out when your staging date is i.e. when automatic enrolment starts and this can be found by using your PAYE reference and entering at The Pensions Regulator:-

This will give you an idea of how long you have to select and set-up the scheme plus assess your staff, which is the next key stage.

Staff need to be assessed to determine who need to be automatically enrolled and who doesn’t.  There are criteria to be automatically enrolled and this is basically that you need to be over 21 years old (but under the state pension age) and earning more than £10,000.  If you are under 21, over state pension age or earning less than £10,000 then the employee has a right to opt into the automatic enrolment scheme.  If the employee opts in then the employer has to make pension contributions if the employee is earning more than £486 per month.

If you need any guidance with automatic enrolment then please call us or consult with your financial advisor (or we can suggest one).

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