From 6th April 2019:  

• The minimum contribution for employers will increase from 2% to 3%.
• The minimum contribution for employees will increase from 3% to 5%.
• This takes the total minimum contribution from 5% to 8%.
• The contributions are based on earnings between the National Insurance Lower Earnings Limit (£6,136) and the Higher Earnings Limit (£50,000). 

It is the employer’s responsibility to ensure that the increase is implemented whether you are using a pre-existing scheme or one you set up for Auto-Enrolment.

The contributions employers and employees must make each month has been increasing in phases since the start of Auto Enrolment, with the next increase scheduled for April 2020.

What is Innes Reid doing to help?

Our specialist advisers are here to help you prepare for this increase. If you do not yet have a plan in place and would like some support, please do not hesitate to get in touch. We can also help with setting up Auto-Enrolment for the first time and re-enrolling your employees.

Just a quick reminder that you must Auto-Enrol employees who are:

• Age between 22 and the state pension age (This will increase to 66 for both men and women in 2019) 
• Earn more than 10k a year (2019/20)
• Ordinarily work in the UK

To discuss your individual requirements with an adviser, please call 01244 347 583 or email us at info@innesreid.co.uk. You can arrange an initial, no-obligation consultation at our expense.

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In October 2012, employers began enrolling their staff in to auto-enrolment pension schemes and by February 2018, all companies will have had to enrol their employees into such a scheme. Nevertheless, concerns had arisen that workers who pay into certain schemes managed by some ‘master trusts’ could be at risk of losing their money if the scheme they were contributing in to collapsed.

Master Trusts are multi-employer occupational pension schemes which means they set up and administer a scheme on behalf of several companies at the same time. Setting up an individual pension scheme can be expensive, so many firms use master trust providers instead.

The new Pensions Bill will provide stricter control of these schemes by the Pensions Regulator (TPR) ensuring that master trusts follow the new standards. At present, only nine master trust schemes are listed on TPR’s website as qualifying for their quality assurance mark.

The Pensions Regulator has welcomed the new bill. Lesley Titcomb, TPR’s chief executive said: “We have voiced concerns for some time about the need for stronger legislative standards for master trusts and have worked with government and other regulators to improve levels of protection for members.

“We have been calling for a significantly higher bar regarding authorisation and supervision, and we are pleased that today’s announcement proposes to give us the power to implement these safeguards”

The Government is also introducing legislation to help make it easier for people who wish to transfer or withdraw money from their pension pots by capping the early exit fees and penalties they currently face.  It is not known at what level they will be capped but more information will be available in due course.

And finally, a new single guidance body is also being set up to help people with retirement advice. It will bring together the Pensions Advisory Service, Pension Wise and the Money Advice Service (MAS)

These are welcome developments, but when it comes to positive planning for your retirement, ‘guidance’ is no substitute for independent advice from trained and qualified pensions professionals.

As Chartered Financial Planners, Innes Reid independent financial advisors hold the G60 advanced pension qualification and are registered as an approved pension transfer specialist with the FCA.

For advice on your existing arrangements, and all your retirement options, contact Innes Reid on 01244 347583 or email info@innesreid.co.uk for a free, initial consultation – we are available at times to suit you.

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The government is on course to reach its target of enrolling 11 million workers by 2018, with more than 5 million workers and their employers already contributing.

Large firms and medium-sized businesses have passed their staging date (the point by which they must have a scheme in place), meaning the focus will now switch to Britain’s smallest companies.

Between January 2016 and March 2018, the number of employers reaching their staging date will average more than 100,000 a quarter, reaching over 200,000 in the first few months of 2017.

Perhaps aware that small firms represent the biggest compliance challenge, due to a lack of either awareness or technical expertise, The Pensions Regulator (TPR) has launched a campaign urging employers not to ignore workplace pensions.

So why should small business owners sit up and take notice of auto-enrolment?

Threat or opportunity for small firms?

Firstly, and most importantly, there are the penalties for non-compliance. These include an automatic £400 fixed penalty notice from TPR, followed by compound daily fines and a two-year prison term.

Putting the issue of penalties to one side, we believe auto-enrolment represents an opportunity for small firms to implement a pension scheme that is genuinely valued by employees.

This view is backed up by research from Barclays Corporate & Employer Solutions, which reveals that many SMEs are finding more benefits to auto-enrolment after their staging date than initially expected.

Barclays found that while only a quarter (26%) of businesses believe before their staging date that auto-enrolment will be a positive, this figure more than doubles to 61% once they have been through the process.

Engagement, attraction, retention

Of those that agree auto-enrolment is positive for small businesses, they see improvements in employee engagement, attraction and retention of staff and productivity.

The key to realising these benefits is communication. This must involve educating staff on the benefits that their new pensions will provide.

Don’t assume that your employees will know how pensions work. Point out that they will receive a contribution from the businesses as well as a top-up from the government via tax relief.

If your pension scheme does succeed in improving your staff retention rates, it will be well worth it. After all, the cost of replacing a staff member can be as high as £30,000.

Embrace auto-enrolment, don’t fear it

Because auto-enrolment is something that will affect all UK businesses sooner or later, here at Innes Reid we are encouraging our clients to embrace rather than fear it.

Done properly, a workplace pension scheme can be the foundation on which to build a broader employee benefits package.

Contact us today on 01244 347583 and speak to one of our employee benefit experts for guidance on choosing the right auto-enrolment solution for your business.

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It’s much easier, because of the immediacy of your financial goal, to save for a deposit for a house or a new car or holiday.

That’s human nature, but the stark reality is that the earlier you start saving for your retirement, the better.

If you’re in your twenties, thirties or forties, it’s easy to put off starting a pension. Many justify this decision to themselves, and their loved ones, by talking about alternative plans for their retirement.

Sadly, falling into this trap can often be a recipe for poverty in retirement. Here are three common pension pitfalls that everyone should avoid:

1) “I’ll be fine, I’ll just rely on the state pension”

Relying purely on the state pension is highly unlikely to give you your desired retirement lifestyle.

April 2016 will see the introduction of a flat-rate, single-tier state pension with a full level of £155.65, but there will be many other reforms and reinventions by the time today’s young workers retire.

Tellingly, a recent survey found that nearly half (40%) of young Britons think the state pension will no longer exist in 2050.

If you’re planning to depend on the state in your old age, it would probably be wise to think again.

2) “Don’t worry, property is my pension”

With house prices continuing their long-term upward trajectory (particularly in London) it’s tempting to see your property as a replacement for a pension pot.

The temptation is particularly strong if you’re one of a growing number of buy-to-let investors.

Don’t be fooled, though. Houses can go down as well as up in value and the financial crisis of 2007-08 offered a stark reminder of the perils of relying on an ever-growing economy.

3) “It’s OK, I was automatically enrolled into a pension scheme”

One of the biggest risks associated with the recent introduction of auto-enrolment workplace pensions is that they lull workers into a false sense of security over their retirement savings. The total minimum contribution currently stands at just 2% (1% from the employer and 1% from the employee). This will increase gradually over time but even so such schemes should not be seen as a solution in their own right.

Call us today on 01244 347583 or email info@innesreid.co.uk for guidance on your pension and retirement planning.

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