Compulsory pension for all is coming.
Effective from October 2012 the Pensions Act 2008 begins to bring the largest of reforms to the British pension industry.
The main objective of this new legislation is to introduce auto-enrolment of employees into a qualifying pension scheme and to make it law for every company, by 2017, to contribute to that pension scheme.
Although this reform will aim to tackle many of the issues facing the pension industry e.g. pension saving being complicated, employee apathy and communication - it also threatens to be an administrative nightmare.
What needs to be done?
- Employers must register (and re-register at the correct time) with the Pension Regulator
- The Employers must auto-enroll employees on time
- Employers may not use ‘prohibitive recruitment conduct’ (e.g. not employing people who intend to join the pension scheme)
- Employers must give all pre-determined material to employees at the appropriate times required by the legislation
- Employers must re-enroll employees (after a certain period) who opt-out following auto-enrolment
- Employers must keep records (of auto-enrolment, opt-outs, contributions deducted and monies refunded to opt-outs etc.) for a 6 year period
- Employers must not induce employees to opt-out of a qualifying scheme
- Employers must give information on pensions to their employees at the point of auto-enrolment, but must not give advice
- Employers must contribute to their employees’ pensions
What can we do to help?
Our Independent Financial Advisers have 17 years experience in managing corporate pensions, couple this with a strong connection with many local businesses and priding ourselves on having an excellent service standard – we are your solution to the coming auto-enrolment headache and for many years in the future.
There are over 750,000 new pension schemes to be written in the UK and we would like to help as many companies achieve this in an affordable way.
As part of Paradigm Pensions we can offer an exclusive middleware product, J&rgonFree™Benefits, developed specifically for the Small and Medium sized Enterprises (SME) market – but there is no maximum or minimum number of employees.
Thompson Prior are focusing on bringing our clients this unique piece of cloud based software to incorporate all of your compliance, auto-enrollment, HR, admin and employee benefits into one neat, user friendly and easy to handle package.
It sounds expensive! But its not!
Thompson Prior can offer this new flexi benefit package at a vastly reduced cost to the employer. Dependant on the size and complexity of the scheme you will need, obviously effects the cost of implementation and management – but with a very low set up cost, low per member fees and reduced rates on all benefits through Thompson Prior, it it is our objective to offset the charges you will incur, we could even save your business money!
We offer an initial cost free and obligation free consultation and demonstration to discuss your needs and current position; if the scheme is of interest to you we can discuss charges involved – please be assured that everything we do is aimed at an affordable solution to the forthcoming changes being imposed.
J&rgonFree was set up 2 ½ years ago by Steve Bee – ex head of Prudential Pensions, Pensions Guru and adviser to Her Majesties Government, past and present. Since this time they have achieved the highest e-excellence rating from all of the Benefit Consultant Platforms reviewed.
J&argonFreeBenefits aims to bring a user friendly, HR tool with auto-enrolment and compliance in mind.
The main features of J&rgonFree are;
- Managing pension Auto-Enrolment
- Administer fixed or flexible benefits
- Produce Total Reward Statements
- Publish and maintain scheme and HR data
- HR self-service with leave and absence
- Desktop message alerts to all staff
- Email alerts and workflow management
- Streamlined joining with product providers
- Worksite marketing for voluntary benefits
- Financial modeling tools
- Management information on-demand
- Data upload and download with Excel
- Real-time integration with XML messaging
- 24/7 information on-demand
- .NET technology with https security.
Other benefits of this middleware product include:
- Compliance with Employer Duties of PA2008
- Increase staff loyalty and retention
- More attractive package to help recruit the right people
- Tax and NI savings from salary exchange benefits
- Recognise diverse needs in workplace
- Enable employees to tailor benefits of employment to suit individual needs and preferences
- Improved awareness and understanding of benefits
- More valued benefit of employment
- Platform to streamline administration and ensure compliance
- Improved return on investment in benefits
As part of Thompson Prior’s package we aim to use Salary Exchange –where relevant – to offset the charges occurred with for the use and management of J&rgonFreeBenefits – and its highly likely we are also able to save you more than the costs through the use of Salary Exchange for pension contributions and other non-cash benefits. Within JargonFreeBenefits it allows employees to sign up to use Salary Exchange which has many saving opportunities on NI & tax for both the employer and the employee. The NI savings on Salary Exchange can be substantial. This is because if an employee decides to use this process they “reduce” their salary in exchange for non-cash benefits.
Salary = £40,000
Pension Contribution = £4,000 p/a
New Salary = £36,000
NI Saving of = £552
In this case if the employee was paying £4000 into the scheme and you chose to match this contribution – as many schemes do. With this saving you can put this towards your contribution, bringing the payment for the employer down to £3448.
To a large employer this might not seem like a large saving, but for 200 employees this saving can be substantial.
Staging Dates & Integration
From your staging date there is a mandatory employee and employer contribution level if an employee does decide to ‘opt in’. If an employer had the staging date of June 2014 their implementation and mandatory contributions would look like this:
June 2014 - Sept 2016
1% EE Gross
Sept 2016 - Oct 2017
3% EE Gross
Oct 2017 Onwards
5% EE Gross
The reform is being introduced in stages to every UK company. The staging date is when a company must have a qualifying workplace pension scheme in place and start contributing, complying and auto-enrolling by. There is expected to be a large backlog of schemes that need to be written in the months preceding these staging dates, so there is no harm in having a system in place and ready.
Each employer has already been issued their staging date although this may not have been publicised to the company yet. Staging dates begin in October 2012 and continue right through until 2017 dependant on the size of PAYE scheme or, if the employer is part of a subsidiary company, the size of the PAYE scheme of the main company.
Please contact Thompson Prior for information or your official staging date, we would be more than happy to help.