The current plans for Pensions reform consist of a package of
changes to both state and private pensions. The aim is to get more
people to save more for their retirement.
It started with the Pensions Act 2007. The second stage of the
reform is the Pensions Act 2008, which set out:
- the new pension responsibilities for employers from 2012,
and
- the establishment of a new personal retirement account scheme,
known as the National Employment Savings Trust (NEST)
A lot of the detail has yet to be finalised, however, it's clear
that pensions reform will completely change the face of the
pensions industry in the UK.
Please note information on this site is based on our current
understanding of the legislation, which may change.
The Basics
The new employer responsibilities under pensions reform are
built on two principles:
- the auto-enrolment of working individuals into a pension
scheme, and
- compulsory pension contributions by employers
Auto-enrolment
Auto-enrolment means that an individual is automatically
enrolled into a pension scheme and doesn't need to do anything or
make any decisions, for example choose a fund or sign an
application form.
Working individuals
The new legislation defines working individuals as workers and
jobholders. Employers have different duties towards their employees
depending on the criteria that each employee meets.
A Qualifying Workplace Pension Scheme (QWPS)
Employers can choose to auto-enroll jobholders into a qualifying
auto-enrolment private pension scheme or into the new NEST
arrangement.
Compulsory pension contributions by employers
The total minimum pension contribution that needs to be paid
into a scheme is 8% of qualifying earnings, with the employer
needing to contribute at least 3%. This is based on 'Qualifying
Earnings' for 2011/2012 of between £5,035 and £33,540. We can give
you the latest information about UK pensions reform and advise you
on your individual circumstances and of course the impact that
decisions you make will have on your business going forward.
In summary, NEST will:
- be a trust-based occupational pension scheme;
- be run by NEST Corporation, which will have a legal duty to act
in the interests of scheme members;
- be one of the qualifying pension schemes employers can use to
fulfil their new duties under the pension reforms;
- be an online pension that provides 24-hour access to
information;
- be easy to administer and also allow employers to hand over
their administration to a third party if they wish;
- be jargon-free so that employers and members will find the
scheme easy to use;
- belong to the individual, meaning employers will not have to
look after the pots of ex-workers. This also means that several
different employers can contribute to the same member's pot over
their working life;
- allow more than one employer to contribute to a worker's pot at
the same time;
- carry no fees for employers using NEST, except in exceptional
circumstances;
- charge members low fees;
- provide an investment approach designed specifically for
low-to-moderate earners;
- give employers the option of simply meeting their minimum legal
duties or suing a customised approach to meet their specific
business needs.
To find out more about NEST and how we can assist your company,
please give us a call on 0113 234 5528 or complete the online enquiry form and we will give you a
call to discuss your requirements.