EBS

The Department of Work & Pensions recently published its research into the cost of workplace pensions in the UK and found that the highest charged schemes charging up to 1.5% of employer & employee funds each year, with the lowest taking only 0.15% each year. The research takes no account of any fees paid by the employer for advice and administration.

The range of charges quoted, highlighted by The Daily Telegraph on April 10th, mean the difference in someone with a £50,000 pension value paying anything between £75 and £750 per annum.

With employers now encouraged to review their workplace pension provision every three years to ensure that it remains competitive this research highlights the importance of doing so.

The Pension Regulator encourages employers to review not just the scheme’s charges - but also the investment choice & performance, the administration performance and the support and education which members are provided with - particularly as they approach retirement.

For an independent audit & assessment of your current provision, contact EBS.

The formal start dates for auto-enrolment of all employees into a pension scheme with compulsory employer & employee contributions have now been announced. The rollout begins with the largest firms (defined by 120,00 employees) on 1st October 2012 and phases in over a four year period.

The announcement said: “The Regulator will write to all employers around 12 months before their ’staging date’ so that they know when to ‘automatically enrol’  their ‘eligible jobholders’. Three months before the employer’s staging date the Regulator will write again to remind them of their duties and the need to register.”

To learn more about exactly what this means for you and when your staging date is - contact EBS.  For a simple summary of the latest guidelines, download our one page guide.

The Financial Times recently conducted a survey of 2,000 UK adults to establish reactions to income tax increases effective 6th April 2010. Effective income tax rates will increase to as much as 60% for those with total taxable income of £100,000 or more.

Key points of the research:

• 33% of those aged between 18-34 would consider using salary sacrifice to reduce their tax bill
• 25% of those polled would consider using salary sacrifice (29% of males)
• 86% admit to doing nothing to reduce their tax burden
• 30% have cut down on spending to prepare for a drop in net income
• £9bn is set to be wasted in unnecessary tax payments by Britons this year

EBS is currently running tax clinics which educate employees about the changes and the options they have to reduce their impact.

One of the most effective planning tools is the payment of pension contributions where effective tax reliefs of up to 65% can be achieved whilst higher-rate relief remains (individual earning £112,950 paying via salary sacrifice) .

The FT also ran an article entitled: ‘Pension relief: Use it or Lose It’ speculating on the possible withdrawal of higher-rate relief on pension contributions as a consequence of Wednesday’s Budget.

To arrange a Tax Clinic, to review your current Salary Sacrifice arrangements or for more details of this research please get in touch before it’s too late!

Details were announced this week of the proposed charging structure for the National Employee Savings Trust (NEST) due to be launched in 2012 to coincide with the requirement that all employers enrol all employees to a pension scheme and start making contributions to it (Click here for full details).

The proposals are that a 0.3% annual fund management charge will be levied in addition to a surprise 2% deduction against all contributions made. We reported recently that all but one of the companies in the running to manage the scheme dropped out leaving Tata as the last man standing. The Government has declined to pay for any of the start-up costs of the new scheme and has offered a loan which NEST will repay via this contribution levy. Once the loan has been repaid the additional charge will be reviewed.

Several industry commentators have been openly critical of imposing a charge which exceeds the current stakeholder charge cap against which private schemes are measured.

To find out how the legislation affects your business and what options you have  please get in touch.