(NEST) National Employment Savings Trust

14/07/11

The Government estimates that about seven million people are currently not saving enough for their retirement, and as result is putting the onus on employers to help encourage their employees to save. Between 2012 and 2016 all employers will have to automatically enrol all eligible employees in a qualifying pension scheme and make contributions to their plan.

What does this mean for you?

The legislation will be introduced in a staged process, dependent on the size of employer and type of scheme.

You can use an existing scheme to meet the new requirements; however it will have to meet certain qualifying criteria:

• The scheme must permit auto-enrolment
• Employees must be auto-enrolled within three months of joining tytthe company (but they can opt in before this waiting period is over)
• A default investment fund must be offered
• Delivers a minimum contribution rate (at the end of the phasing in period) of 3% of qualifying earnings for employers, and a total of 8% including employee contributions and tax relief.

These changes raise a number of specific issues which could have a financial impact on your business, depending on how close your present scheme is to meeting the new requirements:

• The minimum contribution may be higher than you are currently paying, and may be calculated on a different basis.
• It is likely that automatic enrolment will substantially increase membership of many pension schemes
• There is an optional waiting period of up to three months before an employee needs to be automatically enrolled into a workplace pension. Employees can, however, opt in during this period and employers have to start contributions.

We want to make things easier for you

Now is the time to start making preparations for the changes.  We can look in detail how close your existing scheme (if you have one) is to meeting the new requirements, or if you need to put a new scheme in place and also what the financial impact will be on your business and steps you can take to minimise this impact.

Call 01372 844344 and talk to one of our Pension Consultants for more information.