Peoples Pension Auto Enrolment News

Peoples Pension Auto Enrolment News

From:  Lisa Kennery

The People’s Pension is launching a new full support automatic enrolment pension solution for small businesses on 23 November. The solution has been developed based on extensive research with small businesses and their business advisers and financial advisers.

What they’re offering

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Patrick Heath-Lay, Chief Executive Officer at B&CE, provider of The People’s Pension, said:

“We’ll be charging a one off set up charge only, and will not be charging employers for ongoing support.

The People’s Pension launches the ‘complete package’ for small employers

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November 5, 2015 News

The People’s Pension has announced today that it will go live with an enhanced service and support package for new and existing customers on Monday 23 November.

  • Option to ‘Simply comply’ with a fast track route to legal compliance
  • Or to ‘Simply tailor’, putting employers and advisers in control for a bespoke experience
  • Enhanced payroll support and extended opening hours with dedicated employer and adviser teams
  • We’ll even tell the regulator employers have complied

It will offer all new employers joining the scheme the complete package to meet their auto-enrolment (AE) needs – and has been specifically designed to support small employers as they start to stage from January 2016.

New employers will be able to choose between two routes. The first, ‘Simply comply’, will guide them through a fast track process designed to help them comply as quickly and easily as possible. The second, ‘Simply tailor’, offers employers a more bespoke experience to cater for the individual needs of their workforce.

Both routes will offer a number of different payroll options, both manual and automatic. There’ll be a range of online tools and assessment options available – and The People’s Pension will even tell The Pensions Regulator that an employer has complied. Customer service hours are set to be extended too, to 8am-10pm from January 2016, to provide an extra helping hand at sign up.

The enhancements to the scheme’s award winning service and support follow extensive research with small employers and their advisers on what they need from a workplace pension provider. They also build on not-for-profit provider B&CE’s experience of providing pensions to small construction employers for more than three decades.

Patrick Heath-Lay, Chief Executive Officer at B&CE, provider of The People’s Pension, said:

“Workplace pensions can be alien to people outside the pensions industry. Our research and 30 years of experience working with small employers tells us that they want simple solutions and a great deal of support in meeting their auto-enrolment duties. Our doors will remain open to everyone who wants to come to us, regardless of their size and their sector.

“That’s why we’ve developed a simple, hassle free and high support solution for busy people who just want to run their business, not get bogged down in pensions. Simplicity is the key. We’re here to help small employers navigate the auto-enrolment galaxy.”

Employers with a staging date of January 2016 onwards who sign up with The People’s Pension from Monday 23 November will pay a one off set up charge of £500 + VAT for all the support they’ll need for the life of the scheme. Employers with a 2015 staging date who sign up from Friday 1 January onwards will also be charged.

There will be no ongoing charges for employers, and the low annual management charge of 0.5% for members will remain. Employers signing up through an intermediary will pay a reduced charge of £300 + VAT.

Heath-Lay continued:

“We’ll be charging a one off set up charge only, and will not be charging employers for ongoing support.

“Our focus is on putting savers first. We don’t believe in frontloading member charges to cover the cost of supporting employers.

“That’s why we are introducing this charge. We want to make sure that we can keep delivering award-winning customer service and support to new and existing customers, and keep our member charges low.

“We know that small employers feel daunted by auto-enrolment. For the one off set up charge, we will make complying with the law easy, straight-forward, and stress free for small employers.”

-ENDS-

Now: Pensions to add charge

Now: Pensions to add employer auto-enrol charge

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Automatic enrolment provider Now: Pensions is to introduce an employer charge of up to £40 a month for those employers who register with them on or after 1 October 2015 and who have staging dates from 2016 onwards.

Lisa Kennery, our Payroll Manager says, “ACT NOW; Small employers with 2016 staging dates and beyond who have not yet enrolled in a pension scheme, really need to contact us to hear these details.

A possible £40 per month is a considerable sum for small employers to find. If applicants register with NOW: Pensions before 1 October even though their staging date is not until 2016 or beyond, they will avoid the charges described below.

The choice of low cost pension providers may be severely restricted in the near future. Small employers who wish to minimise costs really need to get in touch with us this week.”

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Concerns have been growing that firms yet to auto-enrol will have to turn to NEST (The National Employment Savings Trust) as other providers struggle to make money out of the smaller firms.

Now: Pensions director of policy Adrian Boulding said in an earlier statement that; “The firm will use research to improve services for small employers – such as giving each employer a dedicated member of support staff”

Boulding says: “We are going to charge employers. We’ve made a decision we want to remain open to all employers of all size and provide them with the help they tell us they need to help them manage auto-enrolment.

“But to do that we are going to levy a charge for new employers that join us from 2016. We don’t know what the charge will be yet, because we haven’t asked employers what services they want yet. But we are making a commitment today that it will be no more than £40 a month.”

“We think it’s something that a small business – if they value the services – will be happy to pay. If we get the consultation right we will be delivering the services people have told us they need and would value.”

Boulding adds: “The majority of small employers do not have an adviser, many will use an accountant. They are expecting their pensions provider to help them with the day-to-day nitty gritty of things like filling out forms.

“We are trying to find out exactly what help small employers need – is it a call centre, or a named individual in a call centre or the ability to share computer schemes?”

An announcement was made by NOW: Pensions on 17 September 2015 that the launch of this charge will not apply to any firm that already has an accepted contract with NOW: Pensions even if they are staging in 2016 or beyond.

To handle the growing demand, NOW: Pensions has increased its contact centre capacity significantly and in November is opening a second office in Nottingham with the creation of 250 new jobs over the next two years. Many of these jobs will be in front line client support.

NOW: Pensions recognises the needs of smaller employers are fundamentally different to 54,000 employers that have already staged.

They state in their release of Thursday 17 September: When it comes to selecting a provider for auto enrolment, one in four (26%) employers intend to seek help from their accountant, one in six (16%) are relying on their existing scheme provider and one in ten (12%) plan to search the market and do the research themselves. Just one in 20 (6%) of small and micro firms intends to seek help from an independent financial adviser.

 

Congratulations to Lisa Kennery

Congratulations to Lisa Kennery

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Ever mindful of legislation and most recently the imperative of Auto Enrolment, we are proud to announce that Lisa Kennery, who is our Payroll Manager has now gained:

CIPP – Certificate in Pensions Administration

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Given the recent legislative changes impacting on pensions, including automatic enrolment, there is more of a requirement than ever for businesses to ensure that their employees are equipped with the necessary pensions knowledge and practical skills to ensure that this crucial process is carried out accurately and efficiently.

Errors in pensions administration can be extremely costly, with fines for non-compliance in relation to automatic enrolment being as much as £10,000 a day! By providing payroll and pension staff with the relevant training, businesses can ultimately save themselves a lot of money.

The Certificate in Pensions Administration has been developed with pension practitioners to ensure that it meets the needs of the industry. It provides a clear opportunity for students to develop and demonstrate their knowledge, understanding and application of job roles in the pension industry.

This certificate is aimed at both the public and the private sector and is an excellent qualification for payroll professionals who are responsible for administration relating to automatic enrolment.

Well done Lisa!

Please click through to reach our Auto Enrolment micro site

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Changes to National Insurance

Changes to National Insurance

 

Fact Sheet

 

from:    Lisa Kennery

The Government has recently introduced a number of changes to national insurance and further measures affecting both employers and individuals are in the pipeline.

 

This factsheet provides an overview of some key changes, as well as offering advice on a range of strategies to help minimise your national insurance bill.

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EMPLOYMENT ALLOWANCE

 

The Employment Allowance was introduced in April 2014, with the aim of reducing the employer national insurance liability for businesses and charities, and encouraging businesses to expand and take on new staff.

 

While a small number of exclusions apply, most businesses, charities and Community Amateur Sports Clubs are entitled to claim an annual reduction of up to £2,000 in their employer national insurance contributions (NICs) bill.

 

There are rules to limit the Employment Allowance to a total of £2,000 where there are ‘connected’ employers. For example, two companies are connected with each other if one company controls the other company.

 

The employer’s payment of PAYE and NICs is reduced each month to the extent it includes an employer Class 1 NIC liability until the £2,000 limit has been reached.

 

The allowance can be claimed via payroll software or HM Revenue & Customs (HMRC) Basic PAYE Tools.

 

Do contact us if you believe you are entitled to the allowance as it is possible to claim up to four years after the end of the tax year in which the allowance applies.

 

There are some exceptions for employer Class 1 liabilities which can be covered by the Employment Allowance including liabilities arising from:

 

  • a person who is employed (wholly or partly) for purposes connected with the employer’s personal, family or household affairs
  • the carrying out of functions either wholly or mainly of a public nature (unless charitable status applies), for example NHS services and General Practitioner services
  • employer contributions deemed to arise under IR35 for personal service companies.

With effect from 6 April 2015 Employment Allowance has been extended to those employing care and support workers.

 

If you need guidance on this area please do get in touch so that we can offer specific advice.

 

From April 2016 the Employment Allowance will increase to £3,000.

 

However, companies where the director is the sole employee will no longer be able to claim this allowance.

 

Who will benefit

 

The Government announced the increase in the Employment Allowance in recognition of the fact that the new National Living Wage (NLW) may increase costs for some businesses.

 

Up to 90,000 employers are expected to see their employer NICs liability reduced to zero, allowing businesses to employ up to four full time workers on the new NLW from next year, without paying any NICs.

 

SCRAPPING NICs FOR UNDER-21s

 

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From 6 April 2015 employer NICs for those under the age of 21 are reduced from the normal rate of 13.8% to 0%. For the 0% rate to apply the employee will need to be under 21 when the earnings are paid.

 

This exemption will not apply to earnings above the Upper Secondary Threshold (UST) in a pay period.

 

The UST is a new term for this new NIC exemption. It is set at the same amount as the Upper Earnings Limit (UEL), which is the amount at which employee NICs fall from 12% to 2%.

 

The weekly UST is £815 for 2015/16 which is equivalent to £42,385 per annum.

Employers will be liable to 13.8% NICs beyond this limit.

 

In the Second Budget it was confirmed that the UEL will increase in line with the income tax higher rate threshold. This will increase to £43,000 in 2016/17 and to £43,600 in 2017/18.

 

The new rules apply to both existing employees and employers taking on new staff.

 

They do not affect an individual’s entitlement to the State Pension or contributions based benefits such as Statutory Sick Pay or Statutory Maternity Pay. The employee NICs due are unaffected and remain payable by the employee.

 

ABOLISHING NICs FOR APPRENTICES UNDER-25s

 

The Government will abolish employer NICs up to the UST for apprentices aged under 25 with the stated aim of encouraging the employment of younger workers and boosting the economy by bridging the skills gap.

 

From April 2016, employers who engage apprentices under the age of 25 will be able to claim exemption from employers’ NICs on the cost of the apprentice’s salary up to the UST.

 

Detailed regulations will be issued on the NICs for apprentices including the definition of an apprentice.

 

Who will benefit

 

The new measure is expected to save employers an estimated £105 million in employers’ NICs during its first year of operation.

 

NEW CLASS 3A NICs

 

With effect from 6 April 2016, a new single-tier State Pension will replace the existing two-part system plus various means-tested benefits, for those reaching State Pension Age on or after 6 April 2016.

 

The Government is providing a one-off opportunity to allow existing pensioners and those reaching State Pension Age before 6 April 2016 to top up their additional State Pension, by up to £25 per week by paying Class 3A voluntary NICs.

 

How it works

Each unit of Class 3A contributions will result in £1 per week of additional State Pension. The price of Class 3A is based on an actuarially fair rate with prices varying between £127 and £934 per unit depending on the purchaser’s age.

 

Those wishing to take advantage of the Class 3A contribution must meet the following conditions:

 

  • They must be entitled to a UK State Pension
  • They must reach State Pension Age before 6 April 2016.

The facility will apply from 12 October 2015 to 5 April 2017, for eligible individuals.

 

The new Class 3A contribution will not replace the existing Class 3, and those taking up the new Class 3A will be advised to consider making Class 3 contributions where appropriate.

 

Applications and payments relating to Class 3A contributions will be dealt with by HMRC.

 

Who will benefit

 

The transitional measures are likely to be of particular benefit to those with low earnings, particularly women and carers, who tend to have low Additional State Pension entitlement, and also the self-employed who are excluded from the State Earnings Related Pension Scheme (SERPS) and the State Second Pension.

 

Please note that receiving extra Additional State Pension could impact on certain state benefits. It is important to consider a number of areas when deciding whether to make Class 3A contributions. Please contact us for further advice.

 

ADDITIONAL FUTURE MEASURES

 

Abolishing Class 2 and reforming Class 4 NICs

 

The Coalition Government previously introduced significant changes to Class 2 NICs, resulting in the introduction in April 2015 of new provisions for the collection and payment of Class 2 NICs via self-assessment, rather than direct debit generally on a monthly or six monthly basis.

 

From 6 April 2015 liability to pay Class 2 NIC will arise at the end of each year. The amount of Class 2 NICs due will still be calculated based on the number of weeks of self-employment in the year, but will be determined when the individual completes their self-assessment return.

 

It will therefore be paid alongside their income tax and Class 4 NICs. For those who wish to spread the cost of their Class 2 NICs, HMRC will retain a facility for them to make regular payments throughout the year.

 

Those with profits below the stated threshold no longer have to apply in advance for an exception from paying Class 2 NICs. Instead they will have the option to pay Class 2 NICs voluntarily at the end of the year so that they may protect their benefit rights.

 

The Government has announced that Class 2 NICs will be abolished in this Parliament and it will reform Class 4 NICs to include a contributory benefit test.

 

MINIMISING THE NIC BILL

 

We can work with you on a range of ideas for saving employer and/or employee NICs.

 

Dividends instead of salary/bonus

 

For limited companies you should consider paying dividends rather than a salary/bonus.

 

Where directors are in receipt of a salary/bonus from a company, the NIC cost may be such that part of the payment could be more cost effectively made as a dividend. There are special rules for some companies providing personal services.

 

The decision on whether to pay a dividend is complex because doing so may influence the value of the company’s shares and therefore increase the liability to capital gains tax and inheritance tax. There is also a maximum amount that may be paid, based on the company’s results.

 

Further strategies you may also want to consider:

 

  • Increasing the amount the employer contracts to contribute to company pension schemes.
  • Share incentive plans (shares bought out of pre-tax and pre-NIC income – this is a specialist area. Please get in touch for advice).
  • Salary sacrifice arrangements in respect of tax-free benefits in kind, such as the provision of childcare.

 

For further advice on national insurance contributions, please contact us. We have expertise in all areas of running a business and would be delighted to assist you

 

 

 

Emergency Budget – Holiday Reading

The Emergency Budget – HOLIDAY READING!

By: Anne Wilson

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Tax advisors and MPs will have a little light holiday reading to enjoy following George Osborne’s emergency budget which will take place on 8th July.  Having shaken off the Lib Dems, the government is keen to make its mark on tax policy as soon as possible.

What announcements can we expect based on the Conservative’s manifesto?

Tax Lock

One promise was the introduction of a “tax lock” to prevent increases in VAT, National Insurance Contributions or Income Tax during the life of the parliament.  Why does this commitment need to be legislated for; are politicians so untrustworthy as to break a promise!

The Personal Allowance and the Minimum Wage

The personal allowance will be increased so that by 2021 this will be £12,500.  The personal allowance will be linked with the minimum wage so anyone earning the minimum wage and working for 30 hours a week should not pay any tax.  This suggests that the minimum wage will be £8 an hour by 2021.

Higher Rate Band for Higher Income Only

Alongside these measures is the target to raise the basic rate band so that by the end of the parliament no one with income of less than £50,000 will pay tax at the higher rate.  The basic rate band has been eroded over the years, in 1994/95 approximately 2m people were paying tax at the higher rate compared with 4.6m people now.

Transferable Inheritance Tax Relief

A new transferable inheritance tax relief will be introduced to enable a couple to pass an additional £175k each of value in their main residence to their children so that potentially they could leave £1m to their children without inheritance tax.

The relief tapers away where the estate is worth more than £2m.  This seems likely to add fuel to the fire of the north/south debate as this is will be of far greater benefit to taxpayers in high property value areas.

For example a couple whose only asset is a property worth £1m could leave this to their children free of inheritance tax.  Contrast this with a couple with a property worth £200k and investments worth £800k, their estate would suffer inheritance tax of £140k!  It is unclear at present if the £175k is the top slice of the estate and how it will interact with the nil rate band.

Limit Pension Contribution Tax Relief for High Earners

There is also a proposal to limit tax relief for pension contributions for high earners.  It is thought that relief will be  restricted for those with incomes of between £150k and £210k with the current contribution limit of £40k tapering away so that the maximum someone with income of £210k can contribute to a pension scheme and claim tax relief on will be £10k.

The Child Benefit Anomoly

These are the manifesto pledges but we can expect to see other changes, it is possible that the child benefit high income withdrawal will be calculated by reference to a couple’s income.  This will correct an anomaly,  currently  a couple with income of £49k each can still claim benefit whereas a couple with one  earner who has income of £60k loses the allowance in full.

Capital Gains Tax

There are question marks over the top rate of Capital Gains Tax which was not included in the tax lock announced in the Queen’s speech.  It would also be useful for businesses to know sooner rather than later what the annual investment allowance for capital allowances will be on 1 January 2016.

Up the Chancellors Sleeve

We shall have to wait and see what other surprises the Chancellor has in store.

2014 Chancellors Budget images

 

 

 

 

Auto Enrolment – The Big Quiz

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by: Lisa Kennery

The payroll department here at Pierce is equipped to help and advise you, contact us and we’ll guide you through the process.

Meanwhile:

How much do you know about auto enrolment?

Hit the button and try our quiz:

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As larger employers should now be compliant with auto enrolment legislation, the focus is now on SME`s so let’s talk about what auto enrolment means to you and your business.

UK employers are now required to automatically enrol their workers into a workplace pension if they meet certain criteria. Every employer must comply by law, failure to do so could result in penalties. These penalties are shown below:

No of employees Daily fine (£)
1-4 50
5-49 500
50-249 2,500
250-499 5,000
500 + 10,000

Each employer will be provided with a staging date by the pension’s regulator. The staging date will determine when the process should begin for each business. This date can be deferred by using postponement for a maximum of three months, however within this time employees may wish to join the pension scheme so employers must have a scheme in place by their staging date.  This date is always the 1st of the month. It can be brought forward.

To find out your staging date please follow this link:

http://www.thepensionsregulator.gov.uk/employers/tools/staging-date.aspx
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The key requirements for Auto Enrolment

  • Setting up a qualifying pension scheme with the contribution level that suits your business
  • Assessing your workforce
  • Automatically enrolling eligible jobholders
  • Communicating with your employees
  • Calculating and deducting pension contributions for both employees and employers
  • Managing opt ins, opt outs and ongoing assessments of your workforce
  • Communicating information to your pension provider
  • Record keeping for six years
  • Declaration of compliance

For more detailed information on the key requirements please visit our microsite

autoenrolment

http://auto-enrolment.pierce.co.uk/

Start Early

The time frame recommended to implement auto enrolment is twelve months although this may vary depending on your individual circumstances.
The Bottleneck

Pension minister Steve Webb has already warned small businesses to start preparing early to avoid the impending capacity crunch.  The number of employers staging in a month is to increase dramatically. For example early 2014 approximately 3000 employers staged in a month by February 2016 this will increase to 30,000 per month and by December 2017 134,000.

Involve all parties

From our experience so far the key to successfully implementing auto enrolment is to plan and involve all third parties at the start of the project.  It is surprising the variance in questions from a financial advisor to a payroll professional.

Link to your payroll

For payroll it is vital to know the scheme can accept files on the frequency the payroll is currently run on and receive answers to other questions such as, is the business calculating on whole periods or part periods and is the pay reference period defined on tax periods or pay periods. All of which have an impact on how and when the pension calculations are taken.

Can your current payroll software cope with assessing your employees, or will you require middleware software. this may result in having to run the payroll twice which could be a critical point if the turnaround time for your payroll is tight e.g. you pay weekly.

Let us help you

For further guidance whether or not we already process your payroll please contact Lisa Kennery who will answer any questions you may have and will help you through the process.

 

 

 

What is your retirement age?

Retirement: with the advent of Pension Scheme Auto Enrolment  and the fact that those of State Pension age or those under 18 need to formally opt in as opposed to being auto enrolled means that more and more people are asking:

What is my retirement age?

State Pension calculator

Calculate when you’ll reach State Pension age or Pension Credit qualifying age and how much you may get in today’s money for your basic State Pension.

Start now

Pensioners

Pensions Source Age UK

Paul Lewis talks about retirement planning

Many people ask themselves ‘when can I retire?’ or ‘how can I plan for the retirement I want?’. Financial expert and presenter of BBC Radio 4’s Moneybox, Paul Lewis, talks pensions, annuities, retirement planning and much more.

Watch Paul give his tips and advice

Pension calculator
Find out if you’re ready for retirement by using our pension tool. It can help you assess your income in retirement.

Pension

Our guide on retirement planning

When can you afford to retire?

When can I retire? What should I do first? Everything you need to know, from pension advice to retirement planning, is in our guide.

When can I retire?

Government advice:

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State Pension calculator

Calculate when you’ll reach State Pension age or Pension Credit qualifying age and how much you may get in today’s money for your basic State Pension.

Start now

What you need to know:

This calculator gives an estimate of your basic State Pension.

It doesn’t estimate any Additional State Pension.

You’ll be asked for the number of years you worked and paid National Insurance or got certain benefits. These are the years of your National Insurance contributions that count towards your State Pension.

Count tax years from 6 April to 5 April and don’t count any years twice (eg when you were working and getting benefits). Don’t count the current tax year.

This calculator uses a simplified calculation based on the current law. It can’t take into account every circumstance that might affect you. Don’t make future financial decisions based on its results.

Additional State Pension

Automatic Enrolment Workplace Pensions Reform

Automatic Enrolment

By: Paul Warren

Workplace Pensions Reform – Will You Be Ready?

Following the seminar delivered by Taylor Patterson on Thursday 3 April, we are delighted to attach the link to their presentation:

Auto Enrolment Presentation – 3 April 2014

The main message of the morning was: Act Now

From our own in-house experience we can tell you with certainty that the whole process of preparing for Auto Enrolment is far more complex and time consuming than you might imagine.

Estimated charge

Our Payroll Team and IT Team are, as always, available to help and further information can be gleaned from:

pensions regulator

http://www.thepensionsregulator.gov.uk/employers.aspx

Automatic enrolment

Find out your staging date

Create your plan

Nominate a contact

automatic enrolment

What is automatic enrolment

UK employers have to automatically enrol their staff into a workplace pension if they meet certain criteria. The law on workplace pensions has now changed and every employer must comply.

Getting ready for automatic enrolment

Start planning for automatic enrolment today by finding out the staging date for your company.

Implementing automatic enrolment

What you need to do to automatically enrol your staff into a good quality pension scheme.

Running your pension scheme

Guidance and resources to help employers understand their role in running a good quality pension scheme.

As always, please do not hesitate to contact us for further guidance and support.

You can count on us.