Firms are not ready for new pension rules
It's 12 months until the introduction of enforced workplace pensions that could affect 13 million
Up to 13 million workers could have their pension plans thrown into confusion next year as their firms remain unprepared for new rules which force them to offer pension schemes to employees.
The process known as auto-enrolment centres around the introduction of a new national top-up pension scheme called the National Employment Savings Trust, or Nest for short. Employers will need to automatically enrol workers aged 22 or over who earn more than £7,475 into Nest or a similar pension scheme.
At a conference this week to report on the progress of Nest 12 months ahead of its launch, the Pensions minister, Steve Webb, said: "Our plans to get people into workplace pensions will mean that millions will be saving for their retirement for the very first time. Nest is critical to our plans, as a low-cost and easy-to-use option that is designed for people who are new to pension saving."
It was revealed that almost 100 employers have so far signed up to use Nest ahead of the new rules being introduced in October 2012. But the changes will effect around a million firms, says pension expert Steve Bee. And collectively those firms – which may have just one employee or hundreds – employ around 13 million workers.
In fact, only the country's largest employers – those with 120,000 or more PAYE employees – will be required to enrol employees automatically into a pension scheme from 2012. But all companies will be forced to do so by 2016, and there are 42 "staging dates", effectively deadlines for companies to act by 2016.
"Auto enrolment is a potential HR nightmare for SMEs and smaller companies that don't understand the issues and fail to act in time," warns Bee, who has set up Jargon Free Benefits to help employers comply with the new rules. "Fortunately there is still time to act and the earlier companies do the greater the number of sensible options they will have open to them," he says.
Tom McPhail, pensions expert at Hargreaves Lansdown, also sent out a warning to employers. "I think many companies are not yet aware of just how much work they're going to have to do to ensure they comply with the legislation," he said. "It can all be done but it takes time and I fear that through 2012 to 2014 there will be an almighty scramble to get everything done.
"I also think that given the economic backdrop, the risk is increasing of high levels of opt-outs by members and levelling down of existing scheme contributions by employers." In other words some firms may use the introduction of enforced workplace pensions to reduce the benefits of existing schemes.
"Firms will look to limit costs as much as they can," agrees Chris Faulkner from the employee benefits team at Grant Thornton, who has been running seminars to explain the new rules to firms. "I see a difference between employers who see staff as an expense, and employers who see staff as an asset," he says. "But employers are going to have to embrace the changes."
He says more clarity surrounding the rules is needed. "There are still a lot of holes, meaning an employer may have problems complying with the rules," he adds.
Five Questions: Changes to car tax discs
Bargain Hunter: There's one day left to book a bargain flight with Air Asia
Two million first-time buyers are locked out
How to save money: UK is crashing down the European league table for putting money away
Mark Dampier: When even safety first is a risk, go for income and capital growth
- 1 Keira Knightley topless: Usually conservative actress does own take on #Freethenipple campaign for Interview Magazine
- 2 Oil tanker with $100 million cargo goes missing off Texas coast
- 3 George Galloway left with severe bruising after attack in Notting Hill by man 'shouting about the Holocaust'
- 4 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
- 5 Lady al-Qa’ida: On the trail of Dr Aafia Siddiqui, the world’s most wanted prisoner
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Scottish independence TV debate: Pumped-up Alex Salmond bounces back in bruising second round against Alistair Darling
Do you realise just how foolish the UK looks?
With Douglas Carswell joining Ukip, my party has taken another giant step forward
- < Previous
- Next >
iJobs Money & Business
Highly Attractive Salary: Austen Lloyd: BRISTOL - This is a very unusual law c...
£35000 per annum: Harrington Starr: Network Engineer (CCNP, CCNA, Linux, OSPF,...
£50000 per annum: Harrington Starr: DevOps Engineer (Systems Administration, L...
£60000 - £70000 per annum: Harrington Starr: A prestigious leading professiona...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony