Compulsory Corporate Pensions
15 December 2009
Following the pre-budget report on 9th December 2009, the programme for the introduction of Personal Accounts has been put back by 12 months, resulting in the start date now being October 2013.
In our July 2009 newsletter we provided an introduction to Employer’s Responsibilities under the Pension Act 2008, which advised that these changes were to be launched in October 2012, however these changes have been put back and now from 2013 a new pension regime will be introduced that will involve all companies regardless of size or workforce.
However, it is still very important for employers to be aware of their responsibilities under the legislation and to plan ahead for the additional costs that it will introduce to their businesses.
All companies will be required to enrol anyone age 22 and over into a Personal Accounts pension scheme with set contribution rates to be paid by both employer and employee.
Alternatively the employer can provide automatic enrolment into a comparable scheme.
There is no way around this – the employees must be enrolled into a scheme.
The Government’s objective is to have employers paying in 3% of qualifying earnings and employees paying in 5% of qualifying earnings (including tax relief).
Although the introduction date has been put back until October 2013, for those companies not making contributions to a pension scheme this is going to be a significant increase to their employment costs, and something that needs to be planned for so that a scheme is in place.
For more information on how this will effect you please click here to download our factsheet.