What is a pension?

Actually this is a pretty good question, given that several million people will have one by 2017 and as I know from years of employee pension talks that not many people actually understand what they are.

The technical answer probably runs something like “a tax efficient savings vehicle with limitations around contributions and decumilation” – which means nothing to anyone outside the pensions industry!

Simply put its “one way of saving for retirement that’s got a few incentives to it”. Now I do like a good pension plan. It’s one of the ways that the Government encourage people to save.

If a person puts in 80p then they get the other 20p they’ve paid in income tax put into the pot as well (more if they’ve paid a higher rate of tax). It’s invested in the pot and hopefully grows tax efficiently in the pot until you take it out (although the value of the investment can go down as well as up).

Once the money’s in the pension, it can’t be accessed until you are 55 – which is great for stopping you spending it on holidays / cars / extensions – it’s not supposed to be for that type of expenditure.

There’s been a lot of bad press about pensions over the years and I’ll be the first to admit that they aren’t perfect. However, for a lot of people they are a very good way of saving for retirement. We are helping employers cope with new legislation where they have to auto-enrol employees into a pension. You’ll find more information on our website.

Rob Barksfield

Auto-enrolment Consultant

Telephone: +44 (0)20 7893 3972

Email:  contactus [@] broadstoneltd.co.uk

Auto-enrolment: No time like the present

There are many quirks that I’ve come across when looking at auto-enrolment pensions with clients, one of my favourites is how you treat a zero hour contract worker for auto-enrolment. Like it or not, if they have a contract of employment with you and you pay them through your payroll, then the chances are that you will still have to assess them for auto-enrolment – although I have to caveat that and say you should seek legal advice.

Now, this shouldn’t hopefully be too much of an issue for most employers – you’re already going to be assessing the rest of your employees, so you’ll just have to add the zero hour workers onto the list. Not so bad for the smaller employers, but having just dealt with an employer of 900, where 850 employees have zero hours contractors I have seen it cause some challenges!

If you are a cost conscious employer, it shouldn’t dramatically increase the pension bill either, since many of these workers earn less than the £787 per month to trigger auto-enrolment, plus you can use postponement to mitigate the cost further.

The main challenge around zero hour working is the payroll data. These workers by their nature tend to come & go quickly and getting timesheets in for their irregular hours is not always easy. So if you have zero hour workers, you might need to look at earlier cut off dates for getting information into payroll, so that you can fit in the auto-enrolment assessment with enough time to spare.

Rob Barksfield

Auto-enrolment Consultant

Telephone: +44 (0)20 7893 3456

Email:  contactus [@] broadstoneltd.co.uk

 

 

Data, data, data.

That’s a mantra we seem to live by in our office at the moment. 

You probably have something similar in your firm! But for auto-enrolment, data is king. The assessment & auto-enrolment of your workers all has to be done as part of the payroll process 

– as if you weren’t already pushed for time. So your auto-enrolment assessment needs to be slick and easily manageable.

The one way you can make this easier for yourself is to improve the quality of the employee data you hold on file. 

Post the Real Time Initiative (RTI) this should be the norm, but as we find out pretty much every day at the moment it isn’t. There are still bits of information missing here and there, which slow down the process.

Rob Barksfield

Auto-enrolment Consultant

Telephone: +44 (0)20 7893 3456

Email:  contactus@broadstoneltd.co.uk