The momentum of Pensions Auto-Enrolment in 2014

The beginning of April 2014 saw a significant number of smaller businesses joining into the Auto-Enrolment pension revolution that is sweeping across the UK.

It is clear that the numbers of individuals being Auto-Enrolled into pensions is climbing every day. I received an e-mail on 1 April 2014 (not an April fools) to confirm that the one millionth member had been enrolled within the National Employer Savings Trust (NEST) as an example.

The details of Auto-Enrolment Pensions are nothing new and further details are available on the Chapters Financial website (See Businesses and SMEs section). We have seen the largest employers first being enrolled from October 2012 with many employers with team numbers above 250 being enrolled by early 2014.

Living Longer/ Retiring Later/ State Pension Burden

It is a fact that we are all living longer and that our time in retirement is being extended. The financial burden on State Pensions is ever-increasing and we will see the State Pension age increase from 65 up to a proposed age of around 68 by 2026. We will also see the equalisation of State Pensions being rolled out over the course of the next 18 to 24 months. This should see the State Pension value equalised at approximately £145 a week (£7,540 pa/ paid gross but taxable) for all qualifying recipients post this change (subject to a suitable NI record).

This age increase is also reflected in the minimum age at which pension benefits can be accessed, which is currently 55 years old (having increased from 50 some years ago) and is proposed to increase to age 57 in 2028, as confirmed here: https://www.gov.uk/government/consultations/freedom-and-choice-in-pensions

Staging Dates 2014

The key date for employers in meeting their Auto-Enrolment requirements has been their Staging Date. This is the date to which they must enrol their employees into any new Workplace Pension, if they do not have a qualifying scheme that exempts them from the legislation. In our experience, this means most employers need to make changes to their existing schemes, Defined Benefit (DB) or Defined Contribution (DC), or implement a new pension scheme.

As you may be aware, the majority of employers in the UK are not large and therefore it is anticipated that a far higher number of employers will need to meet their Auto-Enrolment requirements during the course of 2014/2015.

What needs to be considered?

Requirements may include arranging a scheme, assessing the workforce for their eligibility, implementing notifications to the staff, reporting to The Pensions Regulator and implementing the scheme at the correct date with contributions and the relevant data for employees to be able to consider their options once they are opted into the scheme.

As the burden of this legislation comes to bear on many SME’s over the course of the next 12 months we are finding that many employers are contacting us to secure our services going forward to ensure that they meet their obligations. It is from our experience of arranging these types of schemes that we know it is important that the process is started some six months out to ensure compliance with the new requirements. The Pensions Regulator has made it very clear that they will take action against employers who do not meet their requirements and details of their enforcement options are here: http://www.thepensionsregulator.gov.uk/employers/what-happens-if-i-dont-comply.aspx#s10310

Real Benefits

I have no doubt that this framework for pension savings will bear significant fruit in future years in protecting retirement benefits for those people retiring in the future. It is also interesting and encouraging to note that the opt-out rate for employees seems to be very low, running at an average of around 10.8% as noted by the publication, Professional Pensions, here: http://www.professionalpensions.com/professional-pensions/news/2309949/five-surprising-facts-from-the-dwp-s-auto-enrolment-evaluation

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If you would like advice and guidance on implementing your Pensions Auto-Enrolment scheme and to manage its implications and costs to your business then please do not hesitate to contact the team at Chapters Financial at our Guildford or Woking offices. 

No individual advice is provided during the course of this blog.

Keith Churchouse FPFS
Director
Chartered Financial Planner
ISO 22222 Personal Financial Planner

Chapters Financial Limited is authorised and regulated by the Financial Conduct Authority, number 402899.

On-Site Auto-Enrolment Employee Pension Presentations / Seminars

As the momentum and delivery requirements of pension Auto-Enrolment (AE as it is sometimes known) become paramount for many more employers (as their Staging Dates come closer), we have prepared an employee focussed presentation that meets the needs of the new pension legislation and themed to the employers requirements. This is illustrated in the picture of our Financial Planner, Simon Hewitt, delivering the details and requirements of Auto-Enrolment to the employees of a medium-sized company in their locality in early autumn 2013. This was followed by a Questions & Answers session, along with hand-outs, to answers points raised by the audience, with some very positive feedback to this required retirement initiative.

Chapters Financial Limited is employed by companies to implement and deliver a smooth transition of the requesting companies Auto-Enrolment pension scheme, from scheme selection, initial administration, implementation, presentations and end administration including The Pensions Regulator notifications, where required. Our recent certification to British Standards /BS8577 confirms our system based programme aimed to deliver consistent high quality outcomes. We would hope that post-implementation, we can work with employers, their staff and pension scheme to ensure its continued success.

No individual advice is provided in the course of this Blog. Employers and those affected by Auto-Enrolment pensions. As independent financial advisers (IFA), we can guide employers to the right scheme for the needs of their employees and to implement the arrangement in good time (with enough notice) to meet the outcomes of this legislation.

Please contact Simon Hewitt and the team at Chapters Financial to discuss your needs on 01483 578800 (Guildford) or 01483 330800 (Woking).

Keith Churchouse FPFS
Director
Chapters Financial Limited
ISO 22222 Personal Financial Planner
Chartered Financial Planner
Certified Financial Planner

Chapters Financial Limited is authorised and regulated by the Financial Conduct Authority, Number 402899.