Pensions
There is a proliferation of data about Pension Schemes, including those concerned with Stakeholder Pensions. It is expected that most employers will be conversant with the relevant schemes or have professional advice which takes care of such matters.
A general knowledge about the basic Retirement Pension and the State Second Pension (formerly the State Earnings Related Pension Scheme -SERPS) should be acquired by all employers.
In July 1988 the Conservative Government provided the mechanism for employees to opt out of SERPS.
Since then successive governments have considered incentives to keep people out of the State Scheme. It is often a very fine balance for the individual to determine whether he or she should opt out. Wherever possible professional advice should be obtained.
If the Employer provided an “opted out” occupational pension scheme then the choice is already made. The employees pay slightly lower National Insurance Contributions and rely on the Employer and the Scheme provider to ensure that extra money from the Department of Social Security is paid into their pension.
If the Employer’s scheme is “opted in” then employees receive the State Second pension as well as the occupational pension. For this they pay the full National Insurance Contributions.
It cannot be over emphasized that good independent financial advice is most important in determining the right schemes for occupational, personal or stakeholder pensions.
Also some organizations such as Trade Associations have recommended schemes which may appeal to their members.
The Department for Works and Pensions (DWP) provides a guide for employers on Stakeholder Pensions – Order-line 08457 646646.
Under the Pensions Act 2008 there is a duty imposed on all employers to automatically enroll all eligible workers into a qualifying workplace pension scheme (unless they are already in such a scheme)
Following a Government review into automatic enrolment the DWP has confirmed that all UK employers will have to offer a pension scheme from 2012 to all eligible workers between the ages of 22 and State Pension Age. If they do not offer their own scheme they will have to use the new National Employment Savings Trust (NEST)
There will be a 12 week exception period before an employee has to be automatically enrolled. Also enrolment will not be compulsory for anyone earning below their income tax personal allowance
The Pensions Act 2011 introduces measures to implement pension reform and equalizes women’s State Pension age with that of men at 65 by November 2018. Between December 2018 and October 2020 it also increases the State Pension age to 66 for both men and women.
In the Chancellor’s Autumn Statement of 29 November 2011 it was announced that State Pension age will increase to 67 between 2026 and 2028, subject to the introduction of relevant legislation. More information is available on the DWP website – www.dwp.gov.uk
All PBS information sheets are designed to provide the detail you need to implement best business and employment practices. They are not a detailed commentary on the current law and where advice is needed in a specific case you should contact PBS for expert consultation.
pensions