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Employers guide to pension reform
- 1. Ideal An Employers Guide to Pension Reform Financial Management Ltd. “ to protect & to prosper” Ideal Financial Management Ltd is Authorised & Regulated by the Financial Services Authority. Reg No 209535
- 2. A Short History “ to protect & to prosper”
- 3. Stakeholder Pensions “ to protect & to prosper” April 2001 – Govt introduced Stakeholder pensions Employers had to provide access for employees No compulsion to contribute Low take up
- 4. Stakeholder Pensions “ to protect & to prosper” 1% Charge with no provision for cost of advice Limited range of funds and options No ongoing support Doomed to failure
- 6. Timetable “ to protect & to prosper” Size of employer Staging date 120,000 – 800 Over 12 dates from 1 st October 2012 to 1 st October 2013 799 – 250 Over 3 dates from 1 st November 2013 to 1 st February 2014 Less than 50 (sample) On 1st March 2014 249 – 50 Over 4 dates from 1 st April 2014 to 1 st July 2014 Less than 50 Over 18 dates from 1 st August 2014 to 1 st February 2016 New businesses with first PAYE income payable from 1 April 2012 Over 5 dates from 1 st March 2016 to 1 st September 2016
- 9. Contribution Levels “ to protect & to prosper” Date Total minimum contribution % Minimum employer contribution % Minimum difference to be made up by employee % (gross) * October 2012 to September 2016 2% 1% 1%
- 10. Contribution Levels “ to protect & to prosper” Date Total minimum contribution % Minimum employer contribution % Minimum difference to be made up by employee % (gross) * October 2012 to September 2016 2% 1% 1% October 2016 to September 2017 5% 2% 3%
- 11. Contribution Levels “ to protect & to prosper” Date Total minimum contribution % Minimum employer contribution % Minimum difference to be made up by employee % (gross) * October 2012 to September 2016 2% 1% 1% October 2016 to September 2017 5% 2% 3% October 2017 onwards 8% 3% 5%
- 12. “ to protect & to prosper” Options for 2012? Employers must offer a “Qualifying Workplace Pension” So what are the options?
- 13. “ to protect & to prosper” NEST Or Employers own “ Qualifying Workplace Pension”
- 15. NEST Administered by NEST Corporation (Tata Consultancy) 0.3% Management charge 1.8% Contribution charge (temporary) Default funds - Lifestyling option Low cost delivery (Internet) - Government IT System!! Only option at retirement is Annuity “ to protect & to prosper”
- 16. “ to protect & to prosper” Employers own Scheme The Government has designed simple qualifying criteria for Company Schemes: Does it permit auto-enrolment? Are eligible employees auto-enrolled within 90 days of joining the company? Does it have a default investment fund? Does it deliver a minimum accrual rate or minimum contribution?
Notas del editor
- A way of tackling the growing saving gap and encouraging people to become less reliant on the state Employers with more than 5 employees and no alternative scheme (GPP). By October 2001. Fines of up to £50,000. To date no fines. Basic requirements were to provide access and allow salary deductions. Most just provided certificate. Discouraged by some employees. No action by many Very low take-up by employees. Seen by many as salary reduction. 74%of schemes offered report low take up
- Cheap is best attitude. No remuneration for advisers. Charging structure now changed to 1.5% (1 st 10 yrs) Due to cost they were generally very basic schemes with default options ie Lifestyling. No matching of attitude to risk Nobody prepared to service schemes for free. Most schemes are identical to when they were set up Now accepted that they haven’t achieved what they set out to achieve
- Centrally administered Not learnt the lessons of Stakeholder. Index tracking funds No ongoing support, standard options Delivered by e-commerce Govt experience is not a good one ie NHS, Air Traffic control, Passport etc
- Takes responsibility off the employer Liaise with the relevant company for a smooth process Match employees with the correct investment risk (default option compulsory) 95% equity scheme not suitable for 60 yr old You have better things to do than worry about setting up pension scheme.