Workplace Pension Reform
As we reported in our Summer newsletter, Workplace Pension Reform will bring with it auto-enrolment which is intended to ensure that the thousands of workers who currently fail to take up the opportunity to join their employers’ pension schemes each year are automatically included unless they elect to opt out.
The Government has recently announced that auto-enrolment for small firms of up to 50 employees will be delayed until after the next general election in 2015. Employers with up to 3,000 employees will also see the staging of auto-enrolment delayed.
Whilst this may be apparent good news for small business owners, the decision has been criticised for fuelling further uncertainty about the long term prospects of auto-enrolment. However, Pensions Minister, Steve Webb, has stated that the momentum behind auto-enrolment will be “unstoppable” by 2015.
Despite the delay to the auto-enrolment process for smaller firms, the process for larger firms will commence in October 2012 as planned. Individuals working for large employers may therefore find themselves faced with the decision whether to opt out which will require careful consideration. In most cases, the commitment of at least a 3% contribution from their employer will make it worthwhile to stay in the pension scheme.
Business owners, whether small or large, will need to address the Workplace Pension Reforms over the coming years. Those with existing pension schemes on offer can apply for certification that the scheme meets the auto-enrolment criteria.
At Fiducia we are able to advise both individuals and business owners on their options and in the latter case, review any existing arrangements for compatibility with auto-enrolment requirements. Please contact us if you would like further information.