National Pension Scheme - Personal Accounts

The Government is proposing to introduce a national pension savings scheme in April 2012 known as 'Personal Accounts'. 
 
The aim of the scheme is to make saving for retirement the norm. There are currently around 7 million people in the UK who are not saving enough to generate the pension income they are likely to want, or expect, in retirement.
 
In summary, current proposals state you will be required to: 

  • enrol employees automatically into a qualifying workplace pension scheme; 
  • register with the regulator how you have fulfilled the enrolment duty; 
  • allow a genuine opt-out procedure for jobholders and process any resulting refund of contributions correctly; and 
  • make a minimum contribution of 3% of pay to an employee's pension scheme. 
Ensors believe that given the implications and the relatively short timescales involved, you should review your current arrangements and plan a strategy now. 
 
It may be that as a result of a strategic review you decide to implement a scheme exempt from the Personal Account legislation. Whilst there are some thoughts however as to what will make a scheme exempt, none have been confirmed or finalised. It is likely however that the minimum required contributions will need to be 8% of qualifying earnings, not just salary. Qualifying earnings may include salary, commissions, bonus, overtime, shift allowances, and statutory sick, maternity, paternity and adoption pay.
 
Personal Account legislation appears fluid and may change between now and when it is finally implemented. If you fail to act now the implementation of Personal Account legislation could come as a complete shock when it is brought into force in 2012.
 
Ensors can assist in helping you keep as fully up to date as possible regarding the impact this significant change will have. If you would like to meet with one of our advisers to discuss this matter please contact us and we can discuss the proposals further or review any existing arrangements you have in place to see whether these might make you exempt from legislation.

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