Pension warning for Lancashire businesses
A leading pension adviser is warning Lancashire businesses not to delay in preparing themselves for the introduction of automatic workplace pensions.Companies with between 62 and 89 employees are this month receiving their staging date letters as the Government continues to roll out the pension programme.
Between now and 1 April, 2014, letters will follow to employers with between 50 and 62 staff and from receiving notification of their staging date businesses will have 12 months to comply with the new duties.And according to John Davenport, pensions expert for chartered accountants and business advisers Cassons, employers should be drawing up an action plan, involving payroll, HR and possibly outside professional advice, as soon as they receive their staging date.
“Twelve months does not take long to pass by and people shouldn’t leave everything until the last minute,” said Mr Davenport.“They have got 12 months to work out how any existing scheme fits in with the regulations. If they do not have one they will need to find one, and also assess their workforce as to who is eligible and who isn’t.
“They also have to consider who their provider will be and work out how much it will cost them.“It’s also a compliance issue to stay on the right side of the law, because there could be some fairly hefty penalties, so they may need advice to make sure they get to the staging date and they are ready.”
The automatic pension enrolment system was introduced in October last year to encourage more individuals to save towards their retirement, with the number of employees signed up recently hitting the one-million mark after the Government started by targeting the UK’s biggest firms.Under the scheme, employers must automatically enrol workers who choose not to opt out and who are not in an existing qualifying pension scheme, are aged 22 or over, are under State Pension Age, who earn more than £9,440 a year (in 2013/14) and work or usually work in the UK.
Employers will be required to contribute a minimum amount into the scheme on behalf of their workers.These will be phased in but are currently set at a total contribution of two per cent with at least one per cent of this coming from employers. These are then set to rise, meaning that by 2018 the total contribution will be eight per cent, with at least three per cent coming from employers.
The Government hopes the system will ease a pension crisis which has seen recent figures from the Office for National Statistics showing that the number of people paying into a company pension plan had reached the lowest level for 60 years. “It is necessary because people are not saving enough for their retirement,” added Mr Davenport.