New Pensions Legislation
by Ian Irwin
The new legislation on pensions is now in force though the actual impact date may be some little bit ahead. However the hard fact remains that this legislation will impact on a large number of our members.
Briefly the facts are as follows:
If you have any employee age 22 or over who earns more than £7475 you will have to provide a pension scheme. This can either be one you have set up your self or can be the Governments National Employment Savings Trust (NEST). In general terms a scheme which you control will be better for both you and your employee.
The scheme applies to all those who fall into the above band including part time employees.
If you employ less than 50 people (I do not think any of our members employ more) then implementation date is between August 2014 and February 2016 – by the latter date you must have the scheme running.
Advice is to start earlier as during that 18 month period there will be 4,500 organisations setting up every month so best options may not be available as they are overbooked.
If you start by October 2012 contributions are 1% from employer and 2% from employee based on earnings over the NI threshold (currently £5,035) By 2017 this will have risen to 3% from employer and 5% from employee.
Individual employees can opt out but must get certificate saying that they have chosen to opt out from the pensions regulator NOT from their employer.
Failure to have an appropriate scheme in place will lead to substantial fines.
Only exceptions are sole owner managers.
I received my advice from Paul Baker of Independent Financial Services (UK) Ltd. His firm offers free advice to members of the Federation of Small Businesses and to members of the International Association of Book-keepers and their clients. If enough members are interested I will try and negotiate a deal to get them free advice.