Important Pension Changes

One way or another practically all employers in this country are soon going to have to establish a funded private-sector workplace pension scheme for their employees. The new schemes will have to meet a certain standard that has been set by recent legislation and will be referred to as Qualifying Workplace Pension Schemes (QWPSs).

The million employers who currently don’t run a pension scheme for their workers will either have to provide a QWPS or better, after they reach the staging date that has already been allocated to them.

The staging dates, there are 43 of them ranging from 1st October 2012 until 1st September 2016, are the dates by which employers must ensure they fulfil the duties laid on them by the Pensions Act 2008. One of those duties is to establish a QWPS for their eligible (and even possibly ineligible) employees; another is to auto-enrol those eligible employees into the scheme and to pay a minimum employer contribution into the scheme.

There are other duties too. It will be against the law for employers to neglect to fulfil the duties laid on them by the 2008 Pensions Act and any breaches could result in heavy fines.

It is clearly important that all employers understand the duties that are laid on them by the 2008 Pensions Act and know the staging date that has been allocated to them for the commencement of those duties.

Whilst the changes are still some way off, employers need to be thinking about some of the following issues now:

1) If a current pension scheme is in place does it meet the QWPS standards both from outset and at the end of the phasing period?

2) The practical implications of auto-enrolment to the pension scheme

3) How will the required employer pension contributions affect cash flow?

Our Financial Services Company, Ward Goodman Financial Services, are able to help with the review of existing pension schemes and if this is of interest, please contact Paul Burdett on 01202 875900.