Are employers bothered about pensions?

Are employers bothered about pensions?

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Do employers care about the choice of workplace pensions for auto-enrolment. Recent surveys from the Pensions Regulator and NOW pensions suggest they do , but anecdotal evidence from some advisers suggests that this decision is at best "second order".

What's your experience? Do you think things will change with the new freedoms in the Budget?

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By User deleted
14th May 2014 00:19

No single answer ...

... responsible employers will want to do the best for their employees, but then those probably already have provisions in place and are hacked off as it may cost them money to make sure they are AE compliant, even though the pension they offer may actually be far better than AE requires.

The others resent the costs and red-tape burden and will choose the least cost/hassle option and couldn't give a stuff on whether the best for the employee or not, and will probably steal vast swathes of time from their accountants to ensure they keep their costs down.

In my view this legislation is entirely admirable in its intentions, but probably the singularly most inept, burdensome and inefficient piece of legislation ever enacted.

To me the most criminal part of AE is that those below the LEL will have no right to have their employer contribute, yet these are the most vulnerable and least likely to have spare income to invest in a pension. To my mind these employees should have the ratio's reversed so 3% them and 5% employer, of which they may opt out their portion, but the employer must still pay theirs.

Thanks (1)
Replying to atleastisoundknowledgable...:
By Henry Tapper
15th May 2014 08:12

The pension poor

Old Greying Accountant wrote:

To me the most criminal part of AE is that those below the LEL will have no right to have their employer contribute, yet these are the most vulnerable and least likely to have spare income to invest in a pension. To my mind these employees should have the ratio's reversed so 3% them and 5% employer, of which they may opt out their portion, but the employer must still pay theirs.

Those on lowest earnings have the highest replacement ratios- they get most from the new single state pension which will be fully in force in 2016 and they continue to benefit most from welfare.

I'd argue that it is those in the private sector with median earnings and median pension pots who will be most squeezed.

 

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paddle steamer
By DJKL
14th May 2014 11:07

Paperwork and admin re AE for smaller entities

 

Whilst there appears to be some of the life offices offering a full service to larger employers that are starting to move into requiring to adopt AE, there appears to be a very limited provision for the much smaller employers that will require to act later in the process.

The two I have to date found that are offering service irrespective of number of employees/monthly contribution, are NEST and NOW. Anyone know of anyone else?

The NEST scheme appears to merely offer set up and collection of payments with correspondence to employees remaining the Employer's responsibility, NOW appears to offer a better service provision (at least they are currently) with the option of the admin/notifications etc being dealt with by them. I think their charges are very slightly higher but I cannot see any of my clients wanting to spend time keeping diary notes as to when particular correspondence/notifications etc require to be issued to their employees, most of them are flat out trying to earn an income for their business, accordingly NOW from an admin point may have the edge. (Key will be when the micro business entities need to set up will they still offer the full service to them or will it not be cost effective)

I am  the Treasurer of a small charity (After School Club) and we are considering just paying the full contributions ourselves as employers, thus limiting opt outs and the admin that arises from dealing with them. (My view being if we are not asking the employees to pay anything then they would have no incentive to opt out) If we start  early, probably later this year, even if we only have the six employees, the cost increase over the next few years can be gradually absorbed (increasing fees to the parents I am afraid)

I am attending a local meeting of After School Clubs shortly and will be interested to hear how other small clubs, run by parents who often have no business experience and are usually very busy (hence they use the services of such clubs), intend to deal with the admin.

Unlike other entities, whose owners may run them for many years and therefore can spend time understanding the rules, small charities etc often have committee members etc who only serve for a couple of years and whose eyes glaze over when anything like this arises. As soon as they get to grips with the system they will likely leave the committee anyway. Such clubs often do not have a lot of funds to pay professionals. (we had a very small surplus to March 2014 but will have a deficit to 2015 as we  will have to pay some fairly expensive staff training costs as the party now responsible for the children needs to now be qualified to degree level in child care/related subject to keep their position (notwithstanding they have done the job for over 10 years)- new rules.)

I started as Treasurer when my son was in primary one and he graduates this year from University, my length of service being down to having never found another parent who either could prepare the accounts and run the payroll or more likely was willing to admit this was the case and take on the poisoned chalice of never being able to retire from the position. I can curse my wife for attending the first AGM and signing me up. (she did the same with the PTA a couple of years later) Adding AE to the role is not going to make finding a successor any easier.

Accordingly my main consideration in this case is setting up a system that is as easy as possible for my successors to operate to ensure I have a fighting chance of eventually finding a successor !! Whilst still only 54 I would like to think I can step down at 60 in  2020 after 24 years.

 

 

 

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Replying to Dennisk:
By Henry Tapper
15th May 2014 08:19

Providers quoting to everyone

[quote=DJKL]

 

Whilst there appears to be some of the life offices offering a full service to larger employers that are starting to move into requiring to adopt AE, there appears to be a very limited provision for the much smaller employers that will require to act later in the process.

The two I have to date found that are offering service irrespective of number of employees/monthly contribution, are NEST and NOW. Anyone know of anyone else?

The following providers will quote on anything coming their way

NEST

NOW Pensions

People's Pension

Friendly Pensions

BlueSky Pensions

A number of insurers including Standard Life,Scottish Widows ,Legal & General and Friends Life will quote terms on anything above five lives

If you are in the Third Sector, a Charity or in Social Housing you will be quoted by Smarter Pensions (run by Pensions Trust)

 

you can do a search for your client via www.pensionplaypen.com/register

 

 

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Replying to [email protected]:
paddle steamer
By DJKL
15th May 2014 15:43

Henrytapper Thanks

 

Thanks for that , really appreciated, I will have a look at the others.

Re Standard life I had heard the five or more employee part, but I was told total contributions also needed to be on average £100 per month per employee. We would not manage this as if we calculate using total earnings (£50,000 payroll with six employees)  the total contributions would be circa £4,000 per annum for the whole payroll (@8%), on the earnings above the basic lower earning limit this could easily be down to £2,000 or less a year.

Smarter pensions looks interesting as we are an Association which is a Scottish Registered Charity.

 

Donald

 

 

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Replying to GHarr497688:
By Henry Tapper
19th May 2014 18:41

Standard Life


I think you will qualify with Standard Life as the calculation is made on the potential contributions once the phasing is over but you should be aware of the heavy £100pm charge for the payroll and communication interfaces they provide - this is an on going cost and not just at set up.

 

Smarter Pensions are highly rated on www.pensionplaypen.com After a sticky start they have got their administrative act together and now offer a highly rated investment package at a very reasonable cost. If you are  charity , third sector or social housing organisation they must be considered

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By Roland195
14th May 2014 12:56

Define "care"

My understanding of the order of concern for the employer is:-

1. How much does it cost?

2. What do I have to do?

3. Where can it bite me in the backside?

So long as the scheme is AE compliant and falls within each employer's acceptable tolerances for 1-3, the fund could be primarily invested in chocolate buttons for all they care.   

 

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RLI
By lionofludesch
14th May 2014 13:00

Do it because .....

Just like operating PAYE, employers will do it because they have to.

Despite the staging date being a year away and no scheme having been set up, I already have an employee telling me she wants to opt out of her company scheme, which suggests that employees probably aren't bothered either.  It'll be interesting to see what sort of percentage of employees opt out.

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Replying to Trish Baillie:
paddle steamer
By DJKL
14th May 2014 16:53

In or out issues

lionofludesch wrote:

Just like operating PAYE, employers will do it because they have to.

Despite the staging date being a year away and no scheme having been set up, I already have an employee telling me she wants to opt out of her company scheme, which suggests that employees probably aren't bothered either.  It'll be interesting to see what sort of percentage of employees opt out.

 

From speaking to an IFA he advised me that in his experience opt outs to date have been low for schemes now running. However as these are for larger employers, who will likely have a high number of reasonably well paid staff and possibly more generous employer contributions, it may be that those early schemes are not typical of the whole.

I have a client with shop staff on minimum wage who come and go like yo yos, it is these sort of employers with transient staff that will likely be a nightmare to deal with vis a vis employee status and timelines for notifications etc. Luckily I do not run his payroll.

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