As I predicted some time ago, Bridge Investments Partners are increasingly been asked questions about auto-enrolment by employers – they need to know how it will affect them.
We added a section for Small Business Owners on our new website, when it went live, as we knew it would be a key topic of interest. The PDF on that page gives employers some very valuable insight to the auto-enrolment roll out and we have started doing a number of popular presentations on the subject to employers (for a minimum fee, just to cover our expenses).
For the most up to date information on when the roll-out will affect your business, I suggest a quick look on The Pensions Regulator’s site.
For our business client base
Although for many of our business clients, the date for enrolment is some time away, Bridge Investments can help you budget for the effect it will have on your business and it is essential to start the budgeting process now.
For our individual client base
It is just as important for employees to understand what is happening:
As an employee you will be automatically enrolled into a qualifying workplace pension scheme, when it reaches the date for your employer to legally offer a scheme. If you work for a small company this is some time off but it is highly likely it will eventually affect you.
Automatic enrolment happens if:
You are not currently in a qualifying workplace pension scheme
- If you are 22 years of age or older and are below state pension age
- If you earn more than £8,105 a year
- And if you work in the UK (under the enrolling employer’s contract)
You can choose to opt out (your employer will have to let you know the deadline for this) and you can choose to opt in again later. If you don’t however opt back in, you will be automatically re-enrolled every 3 years.
Your workplace pension will be made up of 3 elements, contribution from your employer, contributions from you and government tax relief.
Employers and employees can contribute more than the minimum, which are currently set low, but will be raised over time. The minimum percentages apply to what you earn over a minimum earnings rate, which is currently set at £5,564 up to a maximum of £42,475.
If you think about it as a pension pot, from October 2012 to 2017 the pot needs to be 2% of your qualifying salary, with employers contributing a minimum of 1%. After October 2018 that pot needs to be 8%, with employer’s minimum contribution being set at 3%.
We can advise individuals on the questions they should be asking their employers, what they should be looking for in a workplace pension scheme and how to get the best pension portfolio that meets your individual needs. I look forward to hearing from you.
These links may be useful: www.moneyadviceservice.org.uk and www.direct.gov.uk
Twitter users: Martin Lewis of MoneySavingExpert tweets general advice and also answers some personal finance questions- @MartinSLewis and @Moneysavingexpert
The Which? Money team (@WhichMoney) tweet smart money guides.