Commercial Clients We work in partnership with a number of commercial clients in the Hampshire & Sussex areas in order to provide them with employee benefit arrangements and technical support. Our services range from Executive arrangements such as; - Directors and share protection cover.
- Self Invested Pension Plans.
- Medical and Disability cover.
In addition to group plans for employees such as; - Group Pensions Solutions
- Group Life Assurance.
- Group Private Medical
- Group Stakeholder Plans.
Employee benefit consultants help plan design, implementation, consultation with employees and ongoing plan management. We would welcome the opportunity to provide you with a feasibility study into the solutions available. Why not CONTACT US and find out how we can help, the initial meeting is free.
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The pensions reform and your business With recent research by the Department for Work and Pensions highlighting that fewer than half of the work-age population are saving for retirement, concerns over lack of pension provision have forced the Government to introduce reforms. Between 2012 and 2016 the Government is planning to phase in a new pension scheme – the "National Employment Savings Trust" (NEST) which will require all businesses to contribute towards the pensions of those staff who are paying into a fund. The changes also mean employees will have to opt out of a pension rather than opt in, as the current arrangements require. At present, if you have five employees or more you are obliged to offer them access to a stakeholder pension scheme (unless you have a company pension scheme). However, you do not have to contribute to this yourself. Under the new rules, though, you will have to pay at least 3 per cent of an employee’s earnings into an occupational pension. The employee will have to contribute a minimum of 4 per cent. NEST plans to be phased in over four years, starting from 2012 for the very largest employers (those with more than 120,000 staff). If you have fewer than 50 staff, the date you will need to start paying will depend on your employer’s PAYE code. It could be as early as March 2014 or as late as February 2016, by which time all businesses and staff must be contributing. New scheme affects all employers NEST is intended to give help to low- and middle-income earners and is likely to apply to employees aged over 22 who earn between £5,035 and £33,540. Anybody below or above these earnings will have to request to be enrolled in NEST. According to Government estimates, ten million of this group are not currently paying into a retirement plan. NEST will ensure they have at least some savings to go with a state pension. However, business groups have claimed that its introduction will be a "costly administrative headache for small firms". So even if you are a sole-trader with just one employee – even a part-timer – you will have to automatically enrol them into NEST or an alternative scheme that meets the NEST criteria. Setting up could require a good deal of administration – and cost – and it’s important to kick-start the process early. Speaking to the small business specialist at your HSBC branch is one way to get clear on what you need to do, and how to do it. "The Pensions Act 2008 establishes new duties on employers to provide for their employees’ future retirement," says Alan Millward, head of client services at HSBC’s workplace retirement services. "The Government is even talking of imposing significant fines for businesses that don’t comply, so by planning early your business will be prepared." Employer pension obligations Unless you already contribute to an alternative qualifying pension or your staff choose to opt out, you will have to contribute a minimum of one per cent of qualifying earnings from 2012, rising to three per cent of qualifying earnings by 2017. Together with the employee’s contribution of 4 per cent and tax relief of 1 per cent, a total of 8 per cent of qualifying earnings will eventually be placed in the employee’s pension scheme. If you have any employees earning below or above the £5,035 - £33,540 thresholds, you will only have to enrol them in NEST if they specifically ask you to. Industry concerns Because of its high set-up costs, pension providers and employers have expressed concern that the NEST scheme won’t provide contributors with a good return on their investment. But it is unlikely to change, according to Millward. "Although the details [of the Government review] aren’t yet finalised, it looks like there won’t be any change to the key requirement of having to auto-enrol employees into a pension scheme," he explains. "You should be aware of how these plans could affect your business in the future and consider what changes you may need to make." What you should do now - Get information from Compton Row about staff pension schemes, regardless of the outcome of the review, as the new rules will apply to anyone employing staff – including sole traders.
- Consult your staff over the changes and inform them what the pension reform means for them as their disposable income is likely to shrink unless you can afford pay increases.
- Check your existing employment contracts and ask an HR specialist if any terms need updating and/or changing to reflect the pension reform.
- Recalculate your present wage bill to reflect the increased outgoings if you’re not already contributing to a pension scheme on behalf of your staff. Estimate the additional costs to ensure salaries remain at the present level and what this means for your business revenue and profit margins.
- Review any existing pension arrangements to ensure they meet the proposed criteria, including the ability to auto-enrol employees into it.
Bear in mind, however, that NEST may well mean small returns for contributors in the early years of the scheme. It may be worthwhile to explore other pension schemes that will enable you to meet the NEST criteria. • Download information on the phasing in of the pension reform for different size business from the Department for Work and Pensions Our Employee Benefit Consultants can help you tailor the best scheme for your staff. You may also be interested in our Financial Planning Advice for Retirement services.
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