What is auto enrolment?  Work place pensions changed in October 2012 for employers because employees now have to be offered contributory Work Place pension scheme – that’s right HAVE to!  It’s no longer any good to have a template Stakeholder that nobody joins or to pay a concessionary £30 a month to a scheme.  The Employer will have to meet strict criteria with regards to auto enroling their employees within a specific date called the Staging Date.  This will vary depending on the size the company.  If they don’t meet these dates,  there are large fines (£5000-£10,000) for those companies who ignore the rules.  I say companies, but really it does not matter as you could be a sole trader with one employee or a partnership with 10 employees,  or a sole trader with 5 contractors working for you.  If the people working for you are considered as “job holders” then you will need a pension scheme in place and you will have to “Automatically Enrol” them at precise times after they become eligible.  Employees will be able to opt out, but again there are very strict guidelines surrounding these rules and the Employer will suffer heavy fines if it can be seen that they encouraged a job holder to opt out for any reason.

You can find more information at The Pensions Regulators (TPR)website www.tpr.gov.uk/7-steps or you can click on the following link on our website http://bit.ly/124leyI.  TPR have just issued their first notice to an Employer who has failed to meet its auto-enrolment duties and here’s the articles on the following link http://news.ifaonline.co.uk/c/16OcIddijREGOBFr7BUh4UyLGd

Some Companies will have qualifying schemes already, so will not be affected as they will meet the basic criteria.  However it is estimated that a million employers will need to put a scheme is place, whether they join NEST, increase their existing scheme or take out a new qualifying pension, there are lots of choices.  With a million schemes and roughly 20,000 IFA’s who may arrange company pensions, that works out to be 50 schemes per firm in the next 3 years or so.  This means there is going to be a bottle neck approaching the smaller company staging dates and my guess is that the IFA’s across the country will not be able to handle the work load or will put their fees up to cope with the extra resources needed.

What can I do now? How can Giles Warren Financial help me?  If you are an employer you can give us your PAYE reference number, and we will create a Report to let you know your Staging Date.  This report will help you plan the time you have left to get your qualifying scheme in place.   We can also chat through your auto enrolment options at a free preliminary meeting.  For most employers I would allow at least a year before your staging date to start the process, so that you can get the right systems in place to help you manage your Auto Enrolment duties and satisfy The Pensions Regulator.

If you are an Employee, Contractor or Temp and do not currently have an Company Scheme and you are thinking of taking out your own pension,  you might want to take some advice.  In your scenario its likely your Employer will be setting up a scheme within 3 years, and it would make sense for you to join it.  Therefore if you were thinking of starting a stand alone pension now, it might be better for you to save the monthly premiums you were going to make to a new pension and then put in a lump sum into the new scheme when its set up?

I hope this has been of help and whether you are an Employer, Employee, Contractor, Part Time or Temp and would like some more advice about any aspect of your Retirement Planning,  please call me on 01753 626866.  You can also visit our website at www.gileswarren.co.uk or why not use our Pension Calculator at http://bit.ly/15Dj4mD to determine how much you’ll need to pay to get the pension in retirement you need.  Please remember that this calculator does not take into consideration the Basic State Pension which is currently £110.15 per week and the details in the article do not constitute advice to individuals without consultation.

Thanks

Giles