24/07/14If you’re lucky……..
Well Hello again!
This week my blog focuses on Auto Enrolment/Workplace pensions and in my own way, I think the picture above will become a distinct possibility. I stress this is, as the blog says ‘Victors’ View’ and no one elses!!
Most of my clients are now starting to receive a letter from the ‘TPR’ – The Pension Regulator. Already, I have a few calls asking ‘is this a scam?’ or ‘what should I do?’ or more frequently ‘Ah, I’ve got over a year to worry about it, I’ll talk to you later’
Auto Enrolment, or Workplace pension is the terminology for a call to arms to enrol all who employ somebody, who is over the age of 22, below the age of 65 and earns more than £10,000 per annum into a pension scheme(there are other caveats, but this is the crux!), so if you’re and employer who employs, or you’re an employee and you fit the above criteria-this affects you. Auto Enrolment until now, has concentrated on larger companies who started (or ‘Staged’ as the term is known) in October 2012. The staging (or enrolling perhaps!) is now focussed on those companies with around 50 employee’s and over the coming two years, those who employ one other person than themselves will come into focus-we’re eventually peaking at around 180,000 companies every month will need to enrol/stage/join.
This is a mammoth task! especially, when you see there are around 25,000 registered financial advisers and maybe 50 companies who will facilitate this. Even now, maybe a couple of thousand companies each month need to get themselves set up, but you won’t see it in the press or anything, maybe from the Chamber of Commerce or Federation of Small Businesses.
Even talking to the FSB, they admit feedback from members ‘apathetic’ and they feel ‘its another ‘Stakeholder’ pension scheme’ (stakeholder was introduced in April 2001 and required those with 5 employee’s to have a scheme available for those who wanted to join, by the September of that year, the Atrocities of the Twin Towers in New York happened which obviously changed the focus). This time around, it is different. Auto Enrolment was a Labour idea, helping those who do not benefit from company sponsored pension schemes like the public & private sector-this was aimed at the Micro, Small & Medium sized privately owned businesses.Launched by the then chancellor, Alistair Darling in 2008, it was to equalise the pension playing field, to stop the dramatic drop in income from employed, to retirement. So a change of government-if there is one next year-is unlikely to halt this and the TPR does have teeth, with Dunelm Mill recently being publicised as to have received a warning.
As we approach the smaller sized companies, we will find more of them and possibly, as the pension companies fill up with bigger sized companies from the big supermarkets, high street stores etc, by the time a 5 or 10 man business approaches them, they may have more than they need..leaving the employer with little choice as to what company to use.
A company and an employee has to also consider the cost 2, 3 & 4% of employee earnings will go into a pension for an eligible individual and up to 3% for the employer over the next few years. Surely a company & an individual would want to know this more than a year in advance, so they could plan?
Yes, opting out is available, but to opt out, you have to be in first and 3 years after opting out, you’ll be put back in.
So all I ask, is if you get that letter from The Pension Regulator-act on it. Talk to your business mentors, talk to The Pension Regulator. By all means talk to your accountant, but it is likely that he or she will only look at this from a payroll perspective and that’s not what its all about.
Give yourselves time to think and adjust-perhaps this coincides with the overall salary package you want to pay-perhaps it means something else.
Please speak to your Financial Adviser. if you have one, if not go to unbiased.co.uk or give me a call. Most advisers will offer a free consultation without obligation.
This can be set up and administrated by yourself as a company owner, absolutely no problem at all, in the same way, that you can do your own filing of accounts and run your own payroll, my question is “where is your time best spent?” as the old saying goes, ‘A ship is safe in the harbour, but that’s not where it was built to be’
Have a great rest of week and weekend,
Victor
