Preparing for 2012

No, not the Olympics!  Rather less well known is that 2012 also sees the introduction of AUTO-ENROLMENT, designed to change employees’ access to workplace pension and retirement arrangements – and which will increase costs for many businesses.

Considering the changes

Auto-enrolment has been introduced by the Government specifically to encourage lower earners to start making provision towards their own retirement. The arrangement will use a combination of compulsion and incentive to maximise participation and thereby offer a savings solution for many workers who have so far made no independent arrangements of their own.

The compulsion will come by making enrolment automatic whilst the incentive comes through enforced employer contributions and tax relief which will double the amount the employee invests. An employee has to actively opt out – every year – if they do not want to be involved.

Employers will have a choice of how to meet their new obligations – either their own pension arrangements or alternatively by using the new Government plan, called NEST.

Employers are therefore now faced with a number of decisions. What are the costs and how will you fund them?  In addition, what more flexible arrangements can you offer to retain higher earners or incentivise more valuable employees? Importantly, does your existing scheme meet the new criteria and will therefore be allowed to continue in place of the Government’s plan? The Government plan is a basic, low cost scheme but with very limited contributions limits and investment options.

Getting advice

ECS Financial Services have worked actively with businesses for over 20 years, advising on pensions and other employee benefits. We have particular experience in the setting up and management of workplace pension arrangements and work with both the employer and their employees to ensure their money works as hard as they do.

We are already working with our clients to explain the new rules to help businesses build the additional costs in to their cash forecasting for the next few years. We also analyse any existing pension arrangements to see if they meet the new requirements and recommend the most appropriate option for the future.

For our existing corporate clients, we are offering this “pension health check” free of charge and for a limited period we are offering the same service to new corporate clients. To discuss this further please ring Chris Holland on 0114 2802830 or email chrisholland@ecsbrokers.com.