Business and fi nancial
Pension planning
Alasdair MacDougall, director of Martin Aitken Financial Services asks whether auto-enrolment is working for your business?
Over the next three years, millions of workers will be automatically enrolled into a workplace pension by their employer. Auto-Enrolment (AE), the Government’s fl ag- ship pension initiative started in 20ı2, is a move to ensure compulsory pension provi- sion with contributions shared across employee, employer and the Government, by way of tax relief. However, there are a number of issues which employers need to consider.
ı. Quality of pensions Financial Advisor Ratings website ‘Vouched For’ predicted a “pensions crunch” as 92 per cent of IFAs canvassed said that large pension providers did not have the manpower to cope with the AE roll out.
2. Administration According to Standard Life, around ı0,000 medium sized enterprises reached Auto- Enrolment Staging on ı July 20ı4, with many needing last
minute advice, incurring higher fees as they were behind in their preparations. There have also been significant imple- mentation costs with fi nes for getting it wrong.
3. Pension contributions Under AE, contributions commence with a 2 per cent gross contribution (ı per cent EE and ı per cent ER). The employer contributions rise to 2 per cent on ı October 20ı7 (3 per cent EE) and then 3 per
cent employer contributions (5 per cent EE) from ı October 20ı8. Tax relief is available for the employee and, at a 5 per cent gross contribution, this amounts to ı per cent. So a signifi cant increase in staff costs.
4. Systems Employers need to understand all their contractual arrange- ments and, if appropriate, take advice from specialist employment lawyers. Given the potential fi nes it should be time and money well spent.
Three things to consider: ı. When will you stage? 2. Is your payroll package AE compliant?
3. Is your current employee pension option AE compliant?
® Contact Jayne Cliff ord or Alasdair MacDougall at Martin Aitken Financial Services for further information on 0141 272 0000.
Scottish Dental magazine 75
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