Archive for the ‘Pensions’ Category
Budget Bad News for Final Salary Employers
In our recent article we wrote about the impending extra National Insurance costs that faces employers with final salary pension schemes.
This is going to disproportionately affect those employers who participate in public sector pension schemes – not all of whom are public bodies.
In his Budget yesterday George Osborne announced that these employers will start to pay more from 2016. This is a year earlier than we had anticipated. Osborne called it a ‘progressive pension reform’ although for many beleaguered employers in public sector schemes this will be a moot point.
At a time of massive cuts those employers who find themselves participating in public sector schemes as a result of outsourced arrangements may find this another bitter pill to swallow on top of funding and deficit rate increases.
Steve Clark
Time is running out for Child Benefit Opt Out
The tax man announced that if you want to to stop receiving Child Benefit to avoid a High Income Child Benefit Charge (HIBC) you have to do it by Thursday 28 March 2013.
This is earlier than anticipated and may catch some higher rate tax payers on the hop. Many people thought the deadline would be 5 April to fall in line with the tax year.
if the individual wants to prevent a High Income Child Benefit charge (HICBC) being assessed on the person with the higher income.
What’s the problem?
Broadly, you might be liable to this new tax charge if you, or your spouse, civil partner or partner (who is not married but who is living with them), have an individual income of £50,000 or more and one of them receives Child Benefit. If both of you have an income of £50,000 or more, the charge will apply solely to the partner with the highest income.
This means you have to decide whether to opt-out from receiving Child Benefit if you are affected. If you do, your Child Benefit will be stopped immediately. If not, you’ll continue to receive Child Benefit, but the tax man will reclaim some or all of it from your income at the end of the tax year.
Even if you decide to opt-out from receiving Child Benefit you must still register to get a self-assessment tax return by 5 October this year. That means you have to declare your Child Benefit by 31 January 2014, so that the tax man can reclaim the benefit received between January and April 2013. If you don’t declare this it’s likely you’ll receive a penalty.
What do I need to do?
If you wish to opt-out from receiving child benefit you should take action as soon as possible.
There are ways in which you can hang on to some or all of your Child Benefit by making a pension contribution or charitable donation. If you’d like to chat through your options click here to arrange a meeting.
Steve Clark
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Copyright 2013
Royal Mail happy with 16% opt-out
Royal Mail has confirmed only a 16 per cent of it’s 15,000 weekly paid employees chose to opt-out of workplace pension provision. This is lower than Royal Mail thought they’d get but higher than some companies who have already gone through the process.
Only recently we commented on Asda’s announcement that they had achieved an 8% opt-out rate. You can read more here. The opt-out rates in these larger employers is much lower than many industry commentators had anticipated. Some commentators had anticipated 20%-30% opt-outs.
Some interesting feedback from Asda was that the average age of those opting out was 47. It looks like there may be a core of people who are die hard non-savers who will still opt-out. Getting these individuals to save may prove to be a challenge only achievable by the removal of the opt-out.
Our view is that as the staging dates apply to employers with less employees we’ll see the opt-out rate increase. Smaller employers are unlikely to be able to afford the kind of communications exercise that the Royal Mail and Asda undertook.
It’s all fascinating in a kind of nerdy way! Watch this space.
Early feedback from NEST CEO on new pension rules
Speaking at the Institute of Directors Conference recently , Tim Jones, CEO of NEST said:
‘From our experience with employers, it is clear that they need to give themselves as much time as possible to get ready. We recommend up to 18 months and advise they pull together a team from across the organisation who can help meet their duties.’
NEST is working with over 300 employers, with 100 of these being large employers in the first stages of implementing automatic enrolment. These include household names such as BBC, BT, McDonalds, NPower, Iceland and Travelodge, and employers from a wide range of sectors, such as Barchester Healthcare, Compass Group and Mitchells and Butlers.
Tim also announced four more names of employers to have chosen NEST for their automatic enrolment duties, namely: Balfour Beatty, Four Seasons Health Care, Spirit Pub Company and The Open University.
Reflecting further on lessons learnt so far, Tim drew attention to the need for employers to make sure they work with their payroll providers and in-house teams to get the ‘right data in the right format’.
Comment from 44 Financial:
It’s clear that to successfully deliver a compliant auto-enrolment project medium size employers will need between 12 and 18 months. If you have a staging date in 2014 you need to have started the project by now.
Auto-Enrolment–Webinar
It’s crucial that the way that automatic enrolment interacts with existing employment contracts is fully understood. The key difference is that contractual enrolment requires a worker’s consent to be enrolled into a pension scheme, whereas automatic enrolment does not.
Join Neil Esslemont and Andy Nicholls from the regulator’s industry liaison team as they outline the different processes for contractual and automatic enrolment.
This free webinar, on Friday 22 March at 11.00am, will include the relevance of opting out and postponement to these processes, communicating membership to workers, and identifying whether an existing scheme qualifies for automatic enrolment. There will also be an opportunity to ask questions.