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

Chapters Financial Limited is not responsible for the content of external webpages.

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.

Directors....are you ready?

I read an article through Reuters News Agency recently that confirmed the UK had overtaken Japan as the 2nd largest global pensions market. It is good to see that many of us clearly take saving for our retirement seriously. Hopefully with the continued introduction of the mandatory employer Auto-Enrolment/ Workplace Pension roll out for the next 2 years, we will see this pension’s savings market increase still further. Taking this further, having seen larger employers now enrolled, many SME's are seeing their Staging Dates coming in 2014 and Chapters Financial are certainly seeing a higher level of enquiries on this topic. We have certainly experienced the process and note that advice to reach implementation is vital to achieve the required objectives, from choosing a scheme, to setting up the paperwork to reporting the required notifications to The Pensions Regulator. Starting the process early is important, scheme implementation does take time to prepare, present and finalise (you have been warned!). 

The maximum contribution to pensions per individual in the tax year is falling from £50,000 in this tax year 2013/2014 to £40,000 from 06th April 2014 (from all sources/ Gross contributions). These dates and sums might well be of interest to directors and business managers who are looking to offset business profits as they approach their company’s trading year end. For many limited companies, this might be 31st March, which closely ties in with the end of the tax year. 

It is important to check the 'Pension Input Period' (PIP for short) of the pension you make your contribution to BEFORE making a large contribution. If the PIP period ends after the end of the tax year, you may find that your contribution is restricted to £40,000, rather than the current level of £50,000. 

If you would like guidance and advice on making pension contributions from your business, either by choice for directors, or through mandatory requirements for Auto-Enrolment, then please contact the team at Chapters Financial at either our Guildford (01483 578800) or Woking (01483 330800) offices. 

No individual pension/ financial 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.

 

Nearly new regulatory regime 2013

We are now entering the eighth month of the inception of the Retail Distribution Review ( or RDR for short) process implemented at the very start of 2013.

As noted on our websites front page, Chapters Financial Limited moved to a transparent  fee based client agreed remuneration policy in 2007 (May). Because of this inspired change, we have found the regime transition less complicated than many of our competitors and are proud to have retained our independent status. This may be a reflection of the significant fall in the numbers of advisers in the UK (with numbers still falling) over the last year. (Source: www.imas.uk.com website). Personally, I am saddened by this reduction in numbers, because the access to financial advice that many enjoyed in the past has fallen away, with the anticipation that the Internet will fill the void left by the loss of these services. (See www.advicemadesimple.com as one example).

As a reminder, the headlines of the FSA's planned customer/ client outcomes for the RDR were:

• Advisers qualified to a high standard (Qualification 4 or above).
• Transparent fee based charging structure for both initial and on-going services ( a ban on commission for most services). 
• Choice to use an Independent (IFA) or Restricted financial advice service
• As an additional note, in April 2013, the Financial Services Authority was replaced by a new financial regulator, the Financial Conduct Authority (FCA).

What have been some of the initial effects of these changes we have witnessed?

Many retail financial advisory providers have struggled to comply with these new requirements and this has added to the numbers exiting the profession. It has also been interesting and concerning to note how many existing policy providers (namely some of the big insurance based companies) have been unable to meet the changes required for transparency, confirming that in some cases existing plans cannot accept additional or changed contributions.

Chapters Financial has seen an increase in focussed enquiries in 2013, ranging from pre-retirement, retirement and inheritance tax planning to many SME owner/ director/ managers now getting closer to their company’s  Auto-Enrolment date. It will be interesting to see how the legislation introduced for Workplace Pensions will affect retirement savings in generations to come.

More evidence of the benefits of this regime change will come in future times. It will be interesting to see in time if all the changes have been a success for those seeking financial planning advice.

No individual advice has been provided in this blog and you should seek financial advice (IFA) for your own individual or company’s needs and requirements. Speak to the team at Chapters Financial Limited on 01483 578800

Keith Churchouse FPFS
Director
Chartered Financial Planner

ISO22222 Certified Financial Planner

Chapters Financial Limited

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

Chapters Financial Newsletter

At Chapters Financial Limited, we like to keep our clients and enquirers informed of topical issues and topics that bear relevance to their financial planning. The May 2013 Newsletter has just been produced and will shortly be made available to our clients and contacts in the next few days.

In this blog, I have provided a flavour of what is included, amongst other topical issues, for your consideration.

If you would like to consider the potential for this planning further then please contact the team at Chapters Financial.

Inheritance Tax & Charitable Giving

We are pleased to have received many enquires seeking advice on ways that inheritance tax can be saved. As a highly topical subject, many clients and enquirers also consider charitable giving as a way of saving inheritance tax, both through their lifetime and through their wills. We have introduced a new Webpage entitled Charitable Giving, which details the opportunities further. If you would like to know more or to consider ways of supporting local organisations in an efficient manner then please contact Keith Churchouse.

Auto-Enrolment/ Workplace Pensions reminder

The implementation of Auto-Enrolment with the use of Workplace Pensions is well under way for many employers, starting with the largest employers and moving in company size to the smallest by 2016/2017. We have received many enquiries from Business owners on this subject and are well placed to provide advice and service in implementing the relevant requirements. If you would like to know more or to know when your business’s Staging Date is then please let us know.

The New Financial Conduct Authority

As noted in previous Newsletters, the Financial Services Authority has now ended and has been replaced by the new Financial Conduct Authority at the beginning of April 2013. We are pleased to have met with the new regulator in early April following their transition and we welcome this change and look forward to their work into the future.

New Chapters Financial APP

At Chapters Financial Limited, we try to keep ahead in terms of our communications and the way these can be received. Many of you will have visited our website to access Blogs, Podcasts, Press Comment and other information. This information can also now be accessed by our new APP, suitable for Computer tablets and Smartphones. Please see our website to download your additional access to news, updates and information from Chapters Financial Limited.

No individual advice has been provided during the course of this blog. If you would like to receive individual advice on the topics above, or receive our regular newsletter, then please contact the team at Chapters Financial Limited on 01483 578800.

Keith G. Churchouse
FPFS ISO22222 Certified Financial Planner Director and Financial Planner

Chapters Financial Limited is authorised and regulated by the Financial Conduct Authority, number 402899.
The Financial Conduct Authority does not regulate Tax advice.

Who said regulation would reduce??

I am not sure that I have ever known a quarters time period (the one coming at the end of 2012) when so much regulation and legislation comes into being in the UK retail financial services world. I have nearly lost track of all of the changes and I have summarised these headlines below for your consideration. Some of these changes may not have a direct impact on your circumstances, but it is always interesting how changes work their way through the various systems and manifest themselves later down the line.

This is not an exhaustive list, but gives an indicative feel of some of the differences we will experience in the near future.

Workplace Pensions / Auto-Enrolment start in October 2012

The first wave of large UK businesses are now enroling for Workplace Pensions (sometimes called Auto-Enrolment), with ‘Staging Dates’ declared for all employers, starting with the largest companies and working through to the smallest over the coming four years or so.

With Workplace Pensions now implemented at the start of October 2012, knowing what is required for your business and planning what resources (both time and contributions) need to be deployed should be a priority in making sure that your business is ready to meet the requirements of this new legislation. The Pensions Regulators website is very helpful in detailing these staging dates as they are known, and there is a link to this detail from our website, www.chaptersfinancial.com.

Equalisation of Annuity/Insurance rates between the sexes in late December 2012

In March 2011, there was much press about a European Law being passed (now called Test-Achats European Court Ruling) about abandoning the differential between male and female rates for insurance (and alike) risks/terms. My understanding is that their ruling (and I am not a lawyer) is based on the argument that the current gender based regime is discriminatory because there is overlap between men and women in the ages at which most people die. Obviously, there are opposing views to this argument and its subsequent studies and the European Court would rule accordingly on 01 March 2011, which has now been confirmed.

The now confirmed ruling is due to take effect in December (21st) of 2012 and the hullabaloo that kicked off all those months ago soon died down because its real effects would not be felt until months later. Time has now passed and those months are now turning into weeks, with I am sure much media ‘verbage’ to commence in the very near future.

End of Commission Sales for Financial Advice from end December 2012

The Financial Services Authority's (FSA) Retail Distribution Review (or RDR for short) has been many months and years in the planning and will be implemented at the very end of 2012.

Consumers need to be aware that these regulation changes and their effects on the delivery of UK retail financial services to the public will be significant. The FSA has started a process of raising the profile of the changes and we have also started to see the press joining in the process. I have no doubt that there will be much page space allocated to the topic over the autumn and winter months of 2012. It is important that those seeking financial advice know what these changes mean for them and the choices they will be provided into the future.

The FSA has produced a consumer information document as a guide to the changes and to start the process of educating those seeking financial advice of what to expect in the future. This can be found at the following web-link here: http://www.fsa.gov.uk/static/pubs/consumer_info/rdr-consumer-guide.pdf

Change of the Financial Services Authority (FSA) to the Financial Conduct Authority (FCA) from January 2013

I am sure we will see a lot more publicity of this change as it gets closer. In June 2010 the Government announced new regulatory arrangements for the future. These include the creation of the Financial Conduct Authority (or FCA for short), which plans to apply a new approach to consumer protection, building on existing changes already instigated, but taking them still further. The changes will see the Financial Policy Committee (FPC), within the Bank of England, being responsible for protecting the stability of the financial system as a whole and macro-prudential regulation. The Prudential Regulation Authority (PRA) as it will become known, will be a subsidiary of the Bank of England, with the responsibility of supervising deposit takers, insurers and a small number of significant investment firms.

The Financial Conduct Authority (FCA) will be responsible for regulating conduct in retail and wholesale markets, supervising the trading infrastructure that supports those markets.

I am sure we will hear much more on this subject in the coming weeks as the changes come to fruition.

Summary

Change usually generates opportunity and I am sure that this will be the case for some of the points and changes noted above. We live in interesting times and we will continue to work with you and changes in legislation to meet our clients and enquirers requirements. No individual advice has been provided during the content of this Blog and Chapters Financial Limited can help you with your financial planning, in all its many formats, into the future, continuing to provide the independent financial advice enjoyed by our clients since 2004.

We look forward to working with you into 2013 and beyond.

Chapters Financial is not responsible for the content of external webpages.

Keith Churchouse, FPFS, Chartered Financial Planner, ISO22222 Personal Financial Planner

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

Auto-Enrolment, NEST & Workplace Pensions? What do they mean to you?

The pension’s world is ever developing. This is nothing new and many remain apathetic to contributing to a pension, especially in these times of austerity and economic turmoil. Many have been aware that they have not been saving enough for their retirement over recent years and the situation does not seem to be improving, especially when you consider the ever rising retirement age of State Pension benefits.

However, unfamiliar terms such as Auto-Enrolment, Workplace Pension and NEST Pensions are likely to become household phrases and will affect most employers and employers over the next 5 years.

Auto-Enrolment or Workplace Pension are designed to correct these low contribution levels for those aged 22 or above, introducing mandatory pension savings arrangements through employers, unless an employee opts out. And these changes are only around the corner, with many directors and business owners already having started their planning processes, both for the implementation and for the additional cost that this will add to their overheads.

With reference to timing, full implementation and the start of large employer schemes are being introduced in October 2012 and most employers with more than 50 people in PAYE being joined into the pension arrangement by September 2014 (based on the size of the employers PAYE Scheme at April 2012). Those employers with between 1-49 people in their PAYE scheme will see a staged introduction process between the following dates: August 2014 and February 2016.

28/ 11/ 2011 News Update: Auto-enrolment will be delayed for small businesses, the Department for Work and Pensions (DWP) has confirmed. Pensions minister Steve Webb said today that auto-enrolment for small businesses would not go ahead until after the end of this parliament. Mr Webb MP said: 'Auto-enrolment will not go ahead for small businesses until the start of the next parliament,' he said. 'However this still means more than half of employers will be enrolled before the next parliament. This means the government will extend the deadline by a year for firms with fewer than 40 staff, from 1 August 2014 to 2015.

There will obviously be a cost to this initiative. The initial minimum contribution level is set at 1.0% per annum for employers and 0.8% per annum for employees of their earnings, with 0.20% pa tax relief added. This is effectively 2.0% pa funding of earnings at the outset, although it is proposed that this will climb to a higher total level of 5.0% pa of earnings in 2016. In addition, there is also a third proposed phase in late 2017 at a minimum of 8.0% pa of earnings onwards. Each employers and employees circumstances will be different and therefore, this blog should not be seen or used as individual advice.

More detail on these plans and changes can be found at the following website: http://www.pensionsadvisoryservice.org.uk/future-pension-reforms/auto-enrolment

As noted above, there are many requirements and some costs to this pension planning and Churchouse Financial Planning Limited, Chartered Financial Planners, has detailed these, and many of the other points further, at its website, www.churchouse.com . Alternatively, please call Keith Churchouse on 01483 578800.

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority (Registration number: 402899).

Churchouse Financial Planning Limited is not responsible for the content of external websites.