New pension rules have come in – and every employer in the land is affected.
But few of the 750,000 firms yet to switch to auto-enrolment are aware of the work, costs and timescale involved, a seminar at Sheffield law firm Taylor Bracewell heard.
From now until May 2017, businesses employing fewer than 50 people must provide workplace pensions, or face action from The Pensions Regulator.
They will have to shoulder the costs of consulting staff, enrolling them – and paying into one on their behalf.
The meeting, at Taylor Bracewell’s offices in Fountain Precinct in Sheffield city centre, heard the pension costs could result in price rises, pay or recruitment freezes and even cancelled bonuses and Christmas parties.
But there is no avoiding it, no deferring it and no alternative. And with pension companies already reporting they were “snowed under,” with applications it was time to act, the audience was told.
Firms who fail to meet strict legal duties could be hit with a fine of £400 and additional charges of £500 a day for those with between five and 49 staff. The Department for Work and Pensions launched auto-enrolment in October 2012, with big firms required to put pensions in place for workers.
Under auto-enrolment, all staff aged from 22 to state pension age in the UK who earn more than £10,000 must be signed up to a pension.
Initially, workers pay one per cent of earnings into the scheme, with an extra one per cent from an employer. This will rise to five per cent – and three per cent from employers – by October 2018.
Staff can ‘opt out’ of the scheme – but must be re-enrolled every three years.
The requirements come as radical new pension freedoms have been introduced.
Since April, those aged 55 and over can take the money as they wish, sparking a flood of people grabbing a lump sum – or even the lot.
Figures from the Financial Conduct Authority show more than 200,000 people have accessed their pension pots, with more than a third taking out all of the cash.
In total, nearly £2.5billion was paid out in the first three months – creating a tax windfall for the Government and an unprecedented opportunity for ordinary people to access a sizeable sum of money.
But in both cases – autoenrolment and pension freedoms – it was best to “bite the bullet” and get the advice of an expert, the meeting heard.