What do I need to tell my employees about the new pension regime?
Auto Enrolment – what does it mean for employees?
It is more than likely that you will have seen the television adverts relating to pensions auto enrolment. This document is designed to give you an overview of auto enrolment, what it means for you in practice and what you should expect from your employer.
What is Auto Enrolment?
It’s a process where employers have an obligation to automatically enrol eligible employees into a pension scheme without any action on the part of the employee. Eligible employees will have no option at first other than to become members of the scheme. Only once they have been auto enrolled will employees then have the choice to opt out. However, provided the employee opts out within one month of the date they are auto enrolled, they will be entitled to a full refund of their own contributions.
How do I know if I am eligible?
Employers will have to automatically enrol workers who:
- Are not already in a qualifying workplace pension scheme;
- Are at least 22 years old;
- Are below state pension age;
- Earn more than £8,105 a year; and
- Work or ordinarily work in the UK (under their contract)
When will this happen?
This will depend on the size of the workforce at your place of work. The largest employers had to enrol their employees from October 2012, with the smaller employers not having to deal with it until between 2013 and 2016.
The Pensions Act 2008 specifies a timetable which begins with the largest employers. Each employer in the UK with at least one employee will have to comply with the new pension rules from their own ‘Staging Date’ (this is the date when they must meet the new requirements to provide employees with a qualifying pension scheme) but smaller companies have longer to prepare.
The number of employees and the associated staging date is given in the table below.
| Number of Employees
||Year of Staging Date
|500 - 50000
|59 - 500
|1 - 58
||2015 to 2016
What will my employer and I have to contribute to my pension scheme?
Employers will have an obligation to contribute to your pension. By October 2018 your employer will have to make a contribution to your pension of 3% of your gross salary, and this amount is phased in between now and October 2018. By October 2018 minimum total contributions into your pension will total 8%, with you as an employee making a net contribution of 4%, and 1% being paid by the government via tax reclaim. Obviously both you and your employer can contribute in excess of this level if you wish. The initial phasing in period for contributions starts at your employers staging date. The phasing dates and the minimum contributions you and your employer must make are outlined below.
||Employer Minimum Contribution
||Employee Minimum Contribution
|Staging date - 30 Sep 2017
||0.8% net (1.0% gross)
|1 Oct 2017 - 30 Sep 2018
||2.4% net (3.0% gross)
|1 Oct 2018 - Onwards
||4.0% net (5.0% gross)
Do I have any choice?
Should you decide that auto enrolment is not for you, it is possible to “opt out”. If you opt out you will not be obligated to make a contribution of your net salary to your pension scheme, and thus your employer will not be obliged to contribute on your behalf. The decision of whether to remain in the scheme or opt out is the sole decision of you as an employee.
Your employer will be notifying you of the staging date that is applicable to your workplace and will let you have details of which pension scheme is being offered in due course. There will be no action required on your behalf to become a member of the scheme (as long as you meet the eligibility criteria as outlined above).
THIS BULLETIN HAS BEEN REPRODUCED BY KIND PERMISSION OF HENWOOD COURT INDEPENDENT FINANCIAL ADVISORS TEL : 0121 313 1370 www.henwoodcourt.co.uk
Walker Thompson advised shareholders in sale of major local travel agency
Walker Thompson was pleased to have been involved in the sale of Carrick Travel Ltd to its Directors, Tina Nason and Tracey Carter, as part of a Management Buy Out. Award winning travel agency Carrick Travel had been trading for over 35 years and has numerous offices throughout Warwickshire, the Cotswolds and the M40 corridor. The company operated eight Travel Agencies, a Corporate Travel Division and an Australasia Division. It has retail outlets in Leamington Spa, Cheylesmore in Coventry, Kenilworth, Stratford-upon-Avon, Bourton-on-the-Water, Chipping Norton, Evesham and Pershore.
Sherod Williams, a Director at Walker Thompson represented the Carrick family in relation to the sale and worked alongside Lodders Solicitors of Stratford-upon-Avon who dealt with the Sale and Purchase documentation. Sally Carrick has continued her work locally as a Director of Shakespeare Country, an organisation promoting tourism in the Stratford and South Warwickshire area. Sherod said, "In the current environment people still want a quality service which cannot be delivered through the internet or larger travel agencies. Anyone seeking the personal involvement of a travel advisor with specialist knowledge should give Carrick Travel a call.
Carrick can be contacted through their website www.carricktravel.com.
Solutions for Clients: Insolvency
Walker Thompson does not provide an insolvency service, but works closely with specialist Insolvency Practitioners who are highly regulated and share similar values to ourselves. These firms will provide clients with initial advice free of cost and work alongside us to ensure the best possible outcome for clients who unfortunately require insolvency services.
Problems Raising Business Finance?
If your business is finding finance difficult to obtain then the Enterprise Finance Guarantee could provide a much needed source of funds. Follow the link for more information regarding the Enterprise Finance Guarantee.
Problems Paying Tax, National Insurance or VAT Liabilities?
HM Revenue & Customs (HMRC) have a dedicated Business Payment Support Service designed to meet the needs of businesses who may be affected by the current economic conditions. For Company Directors there may be hidden dangers however. Follow the link for more information regarding the Business Support Service.
Grant and Support Funding
You may be able to obtain grant or support funding to help with your business start up or development. Follow the link for more information regarding Grant and Support Funding.