This was an interesting piece which I thought I'd re-post as we wonder at Ernest Wilson what the impact on the new pension reforms will be.
It was spotted when the Yorkshire Post was delivered to the Ernest Wilson reception this morning http://www.yorkshirepost.co.uk/business
As a society we are living longer, healthier lives. At the moment, there are currently four working people to every pensioner. By 2050 however, there will be just two. Millions of people are under-saving for their retirement, so the Government had to take steps to prevent the situation from getting any worse longer term. The aim of these measures is to help people save for their retirement and secure their future.
As part of these steps, Automatic Enrolment was introduced in 2012 and requires all employers to put certain staff into an approved pension scheme and make contributions. This started with the UK’s largest employers in 2012 and will be rolled out to everybody that employs at least one person by the Spring of 2018.
Automatic Enrolment means significant changes for many employers across the UK. All employers, no matter how small the business, will need to start preparing a workplace pension scheme if they haven’t already done so, though there is no need to panic.
The Government expects that up to 11 million people will be brought into workplace pensions by the year 2018 as a result of automatic enrolment. The latest research by the Department of Work and Pensions shows that this figure is well on its way to being reached and will 'transform the savings culture' of the UK.
The largest employers in the UK have already introduced workplace pensions, or are in the course of doing so. Now it’s the turn of small employers, and if you bear in mind that the majority of people in employment in the UK work for small organisations with 50 or less staff, you can see why it is crucial that small employers should get up to speed with what is happening.
Undoubtedly some may have fears that workplace pensions are all about red tape and extra costs. It cannot be denied that there will be forms to fill in, however these have been kept to a minimum and can mostly be done via the internet.
Any owner or director of a firm will know that a company pension, as workplace pensions are often known, is an expense that goes on the company accounts, so yes, there will be some extra costs for firms. That's the relatively bad news. The very good news is that anyone who wants one will now be able to get a workplace pension and that has to be a big positive for the working population and thus the UK economy as a whole.
If you are running a small organisation, be you a manager or director, then you should be making yourself aware of workplace pensions right now. Over the next few months The Pensions Regulator will be writing to all employers to tell them when their legal duties apply. Any employers who would like to find out their date sooner, can do so on The Pensions Regulator’s website. If for some reason you don’t meet your legal duties you will be in breach of the law.
The Pensions Regulator oversee and control the whole process of introducing and maintaining automatic enrolment in the UK. The Regulator provides a large amount of information to help employers meet their duties but also has extensive powers to compel employers to comply with the law if these duties are not met. There will be penalties, sometimes calculated on a daily basis, for employers who do not register a scheme or who fail to maintain one. The Pensions Regulator may even seek a criminal prosecution in cases of wilful non-compliance.
There is a lot of information available on the Pensions Regulator website, however if employers would like to get external advice then either an accountant, bookkeeper or independent financial adviser should be able to assist - many such professional firms have specially trained staff dealing with workplace pensions.
You can find out more at www.thepensionsregulator.gov.uk. or at the official Government website www.gov.uk/workplacepensions.
Remember, the time for employers to act on workplace pensions is NOW
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