Are you prepared for workplace pension reforms?
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The government estimates that between eight and 10 million
people are not currently making payments into a personal or
workplace pension.
In an effort to address this and to help lower earners save more
for retirement, the previous Labour Government introduced wide
ranging reforms of workplace pensions, detailed in The Pensions Act
(2008).
These reforms will affect every UK employer, regardless of size
or number of employees and represent the biggest change to
workplace savings in a generation.
The biggest change is the obligation on employers, from October
2012 and phased in by size of company, to automatically enrol all
eligible jobholders into a qualifying workplace pension scheme.
Employers will be forced to make pension contributions on behalf
of their workers. Employees will also have to make payments to the
scheme.
The amounts will be phased in over time, eventually resulting in
a payment of 4% of salary from workers and at least 3% from their
employer. As an incentive, the Government will contribute 1% in the
form of Income Tax relief.
Companies have a choice of pension schemes which will meet the
new rules. They can have their own company scheme or use the
government's own National Employment Savings Trust
(NEST). Many companies will need to take professional advice
on the most appropriate scheme for them.
Every employer has specific duties to their employees under The
Pensions Act (2008). Failing to meet the employer duties
constitutes a breach of the rules of the Act, punishable by a fine
or prison sentence.
For further information on company pension schemes, contact the
Towergate team on 01227 285 044 or via email. You can also
visit Towergate's
website.
Wednesday, December 14 2011
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