Employers struggle to achieve 2014 auto-enrolment
Less than 1 in 4 employers staging for auto-enrolment in the first half of 2014 have confirmed their provider and completed everything necessary to be ready to comply. This is according to a report issued by NEST the pension scheme of last resort for auto enrolment.
An article in Pension Expert magazine helps to underline the logistics of what UK employers are facing. This year over 25,000 employers are expected to reach their staging date. If you click here you can read the article. That’s the date upon which you have to comply with the new rules.
Although you can postpone your staging date for up to three months it still means that you have to have everything in place ready to go by the earlier staging date.
As if this wasn’t bad enough news the pensions industry is already hinting that from advisers through to providers it will be very challenging to support all these employers.
This is something that we can echo in our own business. We are currently running six projects for clients who stage this year and are about to take on another two. If there’s any advice that we can give employers it is – don’t sit on the letter from The Pension Regulator telling you when you need to comply. This isn’t something that you can easily do yourself in a month or so. We had a call last week from an employer who has to comply from 1 February who hadn’t done anything about auto-enrolment. Reluctantly we had to turn the employer away as there was no way we could get everything in place in such a short time without jeopardising the service our existing clients receive.
Our experience, which is backed by the views of The Pensions Regulator, is that ideally you would have between a year and eighteen months to complete the project. The last thing you want to be doing is having to make decisions under ti
me pressure.
The Pensions Regulator knows – from your PAYE records with the tax man – when you have to comply. They will write to you about a year to eighteen months before your date. They know that within four months of that date you must go on-line on their website and complete the registration of your auto-enrolment scheme. They will start to write to you about that nearer the time. If you do nothing or are late The Pensions Regulator will know. They have the power to fine you. If you click here you can read more about how The Pensions Regulator will deal with non-compliance.
All is not lost though
As long as you have a reasonable time left we can still help. We offer a fully managed project that will make sure that you are fully compliant that deals with provider selection, assessment processes and software, communications, registration and governance.
Alternatively, we are working with some smaller employers on a more light touch basis where we effectively coach them on delivering their own project. At a time when money is tight form many employers this can be a good way of getting some advice to help you comply.
If you want to kick start your auto-enrolment project and get moving call us on 01163 800 133.
Steve Clark
Auto Enrolment– Unexpected stats on opt-outs
Never ones to rest on their gold plated laurels those busy 
bees at the Department for Work and Pensions have been busy putting together their latest report on automatic enrolment into workplace pension schemes.
The Automatic Enrolment Evaluation Report 2013 shows the breakdown, by different factors, of private sector employees eligible for automatic enrolment savings into a workplace pensions.
The report breaks down the data by industry, employer size earnings and age. The key points from the results are:
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There is certainly a buzz in the energy sector where those employed in the Energy and Water industry have the highest participation rate at 63% in 2012.
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It’s taking longer to sow the seeds and hook new savers in the Agriculture and Fishing industry with a participation rate of just 18%.
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Employers with between 250 and 4,999 employees have the highest participation rate at 53%
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Those earnings over £40,000 have the highest participation rate at 74%.
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Understandably, those earning less than £10,000 have a 32% rate.
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In terms of age employees aged between 22 and 29 have the lowest levels of participation at 24% compared to those aged 40 to 49 and 50 to 64 which have a rate of 50%.
From a personal viewpoint I’m surprised that the opt-out rate has been so low. It’ll be interesting to see how this figure moves as smaller and smaller employers come under the new rules. My suspicion at the moment is that inertia is propping up the figures. In other words, people are just not capable of getting around to getting the opt-out notice, completing it and getting it back to their employer within a month.
As time goes on I suspect that the coffee tables of the nation will harbour more than a few opt-out notices whose destiny is to keep last Christmas’s Radio Times company! But then perhaps I am just an old cynic.
Whether those modest pension savings will ever be enough to live on is a completely different matter.
Steve Clark
Your 5 minute news round-up
An airport in your pension?
The Daily Telegraph ran a story on Tony Fowler, who now owns a 50% stake in the Isle of Wight airport.
He and a friend bought it from the receivers and expect to restore it to profitability. Mr Fowler bought his share through his pension fund – an airport is a commercial property which is among the permitted assets for a self invested personal pension scheme. Mr Fowler now commutes from his home to the airport in his gyrocopter – but has to pay the same landing fees as everyone else.
Interest rates: what to do?
With the recovery in the UK economy, many are predicting that interest rates will rise sooner than the Bank of England predicted with its ‘forward guidance’ in the summer.
At that time, it expected its own base rate to remain at about current 0.5% level until 2016, but could that happen sooner? And what can you do to prevent a rate rise becoming a personal calamity? Both the Daily Telegraph and the Sunday Times asked the question. Both agreed rates could rise sooner than 2016. And both came up with only one positive recommendation: if you have a mortgage, fix the interest rate at today’s low levels to protect yourself from the possibility of soaring mortgage repayments.
Cautious SMEs reluctant to grow
Most small and medium sized enterprises (SMEs) don’t want to grow, reports the Daily Telegraph.
Over 80% of those surveyed said they wouldn’t borrow to expand, while only a fifth plan to increase their capital investment over the next year and 16% will increase R&D spending. Just under a fifth expect to take on more staff.
Is it time to fix?
Borrowers might do well to take advantage of current low interest rates, suggests the Daily Mail.
With inflation currently at 2.7%, two-year fixes at 1.5% and five-year fixes at 2.5% look like a bargain. Rates may fall a bit further for the kind of higher loan-to-value loans supported by the government’s Help-to-Buy scheme (typically 90%+), but fixed rates for borrowers with lower LTV ratios have risen a little in recent weeks.
Invest-er-mate
The 50th anniversary of Dr Who has seen a boom in associated memorabilia, reports the Daily Mail.
Real Daleks are pretty rare, but anyone still in possession of a 1965 Codeg clockwork Dalek – purchased for a princely 82p – can now get up to £800 for it, which is better than a lot of stock market investments have done.
Tech boom forecast
One of Britain’s most successful fund managers has predicted a boom in technology shares.
Nick Train, manager of the Finsbury Growth & Income fund, is quoted by the Daily Telegraph as predicting a massive boom in tech stocks over the next decade. (For the record, Mr Train was not managing a technology fund at the time of the notorious dot-com bust). He holds a third of the fund’s investment in technology stocks.
Carbon credit fraudsters closed
The UK authorities have closed down 19 firms which, between them, had tricked 1500 investors into paying £24 million for worthless ‘carbon credits’.
The scam played up the ‘green’ merits of carbon credits, but these certificates were sold at vastly inflated prices.
Hoping for a Jisa boost
The Daily Telegraph has been campaigning for a change to the rules on Child Trust Funds, to allow parents to transfer these CTFs to the newer and more flexible Junior Isa (Jisa) which replaced CTFs in 2011.
According to the Telegraph, up to 6 million children have CTFs paying poor rates while better rates are available in Jisas, and Jisa schemes also offer a larger range of funds for longer-term investments. The Telegraph predicts that Chancellor George Osborne will announce a change in his Autumn Statement on December 5th.
Affordability tests may spell trouble
At least half of all potential borrowers under the second phase of the Help to Buy scheme could be disqualified by lenders, reports the Sunday Telegraph.
The two biggest lenders that have signed up to the scheme – Lloyds and RBS – use ‘affordability’ tests which measure what proportion of a buyer’s income goes on mortgage repayments. These two banks require borrowers to be able to cope if rates rise to 7%, in effect almost doubling from their current level. Experts say this will prevent a great many potential homebuyers from securing a loan.
Steve Clark
Everything you need to know about pensions
Thanks to the legal bods at DLA Piper for putting together their excellent Pensions News publication.
The October 2013 version just landed. It’s got everything in there you could possibly need (or want) to know. From Auto Enrolment to Pension Liberation and updates of what has been happening with The Pensions Regulator, HMRC, DWP and The Treasury it’s got something for everyone.
If you’ve got any involvement in your organisation’s pension planning there is something in there for you. If you read nothing else this month – read this!
Click here for to go to Pensions News.
Steve Clark
40% of Nothing
Believe it or not there are a large number of higher rate taxpayers are losing money by not claiming back their additional tax relief.
Prudential has recently published a survey highlighting this issue. The survey found that:
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26% of employees paying higher rate tax do not claim the extra tax relief on their pension contributions.
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It’s estimated 185,000 people are losing, on average, £1,255 per annum.
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A further 15% (over 100,000) are not sure if they are reclaiming the extra relief they are due.
As bad as these findings are there are also likely to be some of those 185,000 who have unnecessarily lost their Child Benefit due to the fact that their earnings haven’t been adjusted to reflect the extra tax relief. Add this potential on and it’s clear that some higher rate tax payers out there are losing a large amount of money.
All is not lost
If you haven’t claimed any relief it’s not too late. You can make a claim for up to four years. So any overpaid tax from 2009/10 can be reclaimed up to 5th April next year.
If you’re not sure whether you have or haven’t we offer a tax relief review service that will analyse your pay slips and tax records to make sure that you are getting what you are entitled to. Just call us on 01163 800 133 to get this underway.
Steve Clark