Auto Enrolment – the rising tide

Auto Enrolment – the rising tide

Auto enrolment pretty much effects everyone that isn’t yet retired. In a nutshell, having faffed around with pensions for the last 30 years the Government are now forcing employers to offer pensions to their staff. Employers will be required to contribute 3% of salary… employees 5%.

It’s true that this is not a compulsory pension. Employees can opt out. Employers cannot. There are hefty daily fines for those that fail to meet the deadline to implement their new, qualifying staff pension. Everyone has to comply…. not doing so isn’t an option.

All the UKs biggest businesses have now set up their auto enrolment pensions (also called workplace pensions…. helpful eh?). Just pause to think what an administrative nightmare this is… staff coming and going on a daily basis, all needing to comply else suffer fines. What a headache… thankfully technology will reduce the headache, but action still needs to be taken.

Now small and medium-sized firms are gradually reaching their “staging date” (start date) and there will be a massive number of them. Few realise that there are implications for contracts of employment and of course operating costs. However the biggest issue is technology as all staff need to have a working email address… presumably a work email address is easiest to monitor and demonstrate that information has been sent by the employer.

Pain Relief

Most financial advisers and Accountants aren’t getting too involved in auto enrolment. Frankly because the work can be expensive and small firms don’t want that. So we have found a solution – a bit of really good IT. Its called AE in a Box. It isn’t a pension. It’s a project management tool that ensures that you are compliant with the rules, makes it easy to set up a scheme and communicate with your staff.

If you are an employer (even if you run a Limited company with only one other Director or member of staff) you have to comply. So check out the very easy to use tool. It is a monthly license subscription (and you will need the ongoing support) as even those that opt out of your pension, will need to be opted back in every 3 years… the Government hope that inertia will ensure more people join pensions and thus build up their own resources, rather than relying solely on the State Pension… which is already over-stretched.

Are you an Employee?

Do your boss a favour, point them to our tool and earn some brownie points. I promise you that auto enrolment is a headache and leaving it until thousands of employers are trying to do the same thing at the same time will end in tears…. and fines. As an employer myself, I really value people who bring me solutions not problems.

Are you an Accountant?

The tool enables Accountants to assist in the process, providing and checking data. This will make your life much easier on so many levels when dealing with your small firm clients.

Click this link to get more information, its low-cost with a single sign up fee. The monthly fee isn’t taken until 6 months before your scheduled staging date. But whatever you do, now is the time to take action.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

Auto Enrolment – the rising tide2023-12-01T12:19:57+00:00

Auto Enrolment Fines – Workplace Pensions

Solomons-financial-advisor-wimbledon-blogger

Auto Enrolment Fines – Workplace Pensions

As expected, the pensions regulator is taking auto enrolment (workplace pensions) rather more seriously than it took stakeholder pensions. Employers were warned about the prospect of fines and as the number of firms that should have started their pensions has multiplied, so have the fines. This is unlikely to alter as the momentum increases. This year medium sized and some small firms will be expected to comply with the rules. 166 penalty notices were issued in the last quarter of 2014 and over 1,100 compliance warning notices sent to firms.

Avoid the FinesAE in a Box

Employers need to get on with their auto enrolment compliance. In practice this is a project management exercise rather than about finding a good pension. As a result I advise employers and Accountants to use the very low cost software from AE in a Box. It enables you to fully comply in time and avoid fines. Importantly it is an ongoing project – much like PAYE is an ongoing project, so data and processes need to be adhered to strictly.

AE in a Box

AE in a Box is very inexpensive, £79+VAT to set up and then £29+VAT a month thereafter. The monthly subscription will only begin 6 months prior to your staging date. I would urge you to consider this bit of kit. It isn’t a financial product, its a tool to help you do the job yourself, cost-effectively rather than getting a more expensive planner like myself involved.

Dominic Thomas

Auto Enrolment Fines – Workplace Pensions2023-12-01T12:39:55+00:00

I have plenty of time to sort out auto enrolment right?

Solomons-financial-advisor-wimbledon-top-bannerI have plenty of time to sort out auto enrolment right?what to expect

Love it or loathe it, auto enrolment is under way. The biggest companies and organisations are now running their schemes. As an employer you may be thinking that you have plenty of time to sort out your auto enrolment, you don’t.  On the face of it one would think that setting up a pension for everyone to be opted in from the outset would be straight-forward (if I were King…) however there are all manner of obstacles to overcome, many of which employers are not terribly aware of. The truth is that this is not really about pensions, but about compliance and communication. Whilst the process is dressed as a pension, the reality is that the pension bit is probably the easiest element to resolve.

The real issue is to ensure you are compliant with the rules. This means not being late for your date, that is your staging date (find it here). If you are a small firm with 4 or fewer staff the fixed penalty is £400 and then £50 a day. If you have 5 staff its £500 a day, rising to £10,000 a day for firms with 500 or more staff. So it simply isn’t worth being late and in practice the entire process is likely to take 12 months from start to “implementation” and rather like having a baby, the pregnancy and then birth is not the end of the job… its an ongoing process, requiring a lot of time, effort and understanding.

So in preparation (the pregnancy part) quite a lot needs doing, this is where a financial adviser can help, though many employers will hope that they don’t need assistance, they probably will. In this analogy (and I don’t want to stretch it too far) the financial adviser is rather like the local GP, who is involved with the care, monitoring and progress and the life-long after care, but the parents (the employer) carry the responsibility.

To make matters harder there are a lot of companies all trying to do the same thing at the same time. Staging dates have been staggered, but there is a genuine problem with capacity. An estimated 1.4million firms will be attempting to bring their schemes into life. This is not going to be easy and most of the pension companies that you have heard of are alarmed at the prospect and cherry picking those that they want to work with, some are also simply closing the doors. This will leave pensions that you haven’t heard of as your main choice. Here is a chart showing the staging dates over the next 3 years by quarter. So you are just going to have to trust me on this – get on with the process, wave of applications is going to cause all sorts of capacity problems for pension companies.

Staging-Numbers-by-Quarter5

So, let’s see how far I can get away with the analogy…whilst you have be currently of the view that you are searching for a new date (Valentine’s is shortly upon us) you are actually already in an arranged marriage and fairly stern in-laws have planned the baby-shower and booked a hotel to be near your local maternity ward…. Well maybe it doesn’t work too well as analogy, but you get the point. Time is running out whilst auto enrolment provides the opportunity for opting out (by employees) employers are not permitted to do the same and under no account permitted to influence employees.

Tomorrow I will outline some of the key issues that have little or nothing to do with pensions, but everything to do with compliant auto enrolment… after all how many small firms can afford fines of £15,000 a month?

Dominic Thomas: Solomons IFA

I have plenty of time to sort out auto enrolment right?2023-12-01T12:38:57+00:00

What’s the row over pension charges now?

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What’s the row over pension charges now?

You may have been listening to Radio 4 or perhaps seen the TV news, Steve Webb the pensions Minister is doing the media rounds having announced that charges on pensions should be capped at 0.75% which he announced yesterday and has been plugging his cause since. There is no doubt that there are many very expensive pensions and I would go as far to say that there have been lots of “rip off” pensions. There are too many vested interests, this has broken out in a row over pension charges.

Is there any such thing as a free lunch?theawfultruth

We now have various think tanks and Providers all taking the opportunity to price to the bottom and distance themselves from “rip off pensions” as quickly as possible. An assortment of spurious views about the impact on the final value of a pension fund is now doing the rounds. The vast majority of this is utter drivel. We are all to blame for this (advisers, providers, investors, regulators and Governments) why? Well because over the years we have colluded in the deceit that anything to do with financial services is free. It isn’t. I had hoped that this delusion would have been put to bed by the introduction of RDR, yet AE (auto enrolment) exposes the deep resistance to a shift in mindset.

Can a pension have low charges?

It is perfectly possible to use a pension that has low investment charges and by low I mean less than 0.30%. However this is merely one element of the piece. The administration costs are high due to well intentioned regulation. The “sales costs” are high due to well intended regulation. The regulation is designed to protect the investor and the wider market.

Why does AE have unique charging problems?

The unique problem that AE brings is that there are some very tiny premiums. Suppose you earn £10,000 a year and in several years time you will have contributions of 8% a year (£800) a cap of 0.75% on this would be £6… ok its based on the value of your fund, but given that most will not be more than £4,000 that’s £30 to cover the investment and administration for the year (and by the way you can opt in and out, switch funds, vary the payments creating more administration). It’s a nightmare for pension providers. Some have come up with some low cost solutions (hardly any investment choice) and some have a fixed monthly fee. Well even at £1.50 a month (£18 a year) that’s a higher proportional charge on a small fund of £1,000 (1.80% to be precise). The Government backed (taxpayer funded) NEST is loss making and will be for many years. This is typical of Whitehall delusion that they then expect commercial enterprise to replicate. We all know Governments are not good at maths… don’t we?

The solution is right under their noses

Stakeholder pensions (with low charges) failed because there were other better alternatives at a lesser or more competitive price. The Government (this one and the previous one) believe compulsory membership isn’t quite ok, so we have a “difficult not to join” approach. However, I would argue that today employers and employees already have a proper pension system. It’s called National Insurance and the State pension. We know it’s not good enough, so why not simply make it better for everyone? It has no investment risk and is already set up. For those that want (and need) more than the State pension (most of us) then there are plenty of very good pensions around, any decent adviser can structure a sensible plan – but it is not free… neither should it be. If we want to create a society of that is independent of the State, we all need to face some adult truths.

Dominic Thomas: Solomons IFA

What’s the row over pension charges now?2023-12-01T12:38:33+00:00

Business Owners – NEST news

2011: Nesting – Chuldenko
Pension planning is complicated and despite good intentions, this remains the case. The Coalition Government have delayed the review of the State Pension and this week have announced yet even more changes to NEST which alters the staging or more accurately, implementation dates. As you may imagine this is often about the detail and meaning of words, something that I discussed on Wednesday.
It seems that greater clarity was required to define employers and organisations by the size of their PAYE scheme. It was possible under the previous definition that existing pensioners could be captured by the original definition (not the intention). In addition, the “full time equivalent provision” is also being dropped and allows small employers who share a PAYE scheme with a larger firm to move their staging date.
The alterations mean that there will be an increased number of smaller firms who will have their staging date pushed back as a consequence. If this is all Greek to you, don’t worry. Forward thinking employers are getting on with implementing decent pension arrangements for staff. I suggest you keep things simple. As the end result will be a pension that forms part of the employee package, make it attractive and get on with setting something up that enables you as the employer to rewards staff and provide further reason to be loyal. For more information about auto-enrolment and NEST have a look at the Pensions Regulator site.

Please be aware that auto-enrolment is likely to be the biggest shake up for your pension planning in memory. Despite assurances, it has all sorts of problems with administration, which will be a very laboured task for most small firms. that lack an HR department. I was at an all-day training event yesterday to get the latest on this, frankly I don’t think many advisers will want to get involved. The knock-on impact is significant.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting
Business Owners – NEST news2023-12-01T12:22:19+00:00

NEST: News from The Pensions Regulator

2009: Bureaucracy – Mark Perreault
As an independent financial planner based in Wimbledon (well only a mile away) I am working with a number of employers to ensure that they are ready and properly set up for auto-enrolment or NEST. This is in essence the Government’s long overdue introduction of compulsory contributions towards a pension. Well, not quite – actually all it means is that you will be automatically enrolled unless you opt out. The contributions will eventually work the way to 3% from the employer and 5% from the employee. More can be contributed, but not less – unless you opt out. Many financial planners are not getting involved with this sort of work as it is fairly time consuming and not terribly profitable – but that’s not really an issue for advisers that operate on a fee basis, which is  something we do at Solomon’s – so there’s no issue about ensuring you get the right and best pension arrangement for staff.
The Pensions Regulator has published some up to date information, quite a lot of pdf’s to download and read – remember that this is a system that impacts every employer, even those with a single member of staff. Importantly as the work will be primarily conducted online and records of contributions need to be maintained properly (like PAYE)  this has implications for IT and virus software at every business in the land. So make sure you get some decent IT advice.
We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting
NEST: News from The Pensions Regulator2017-01-06T14:40:09+00:00

Nest: Auto Enrolment Dates

1937: Love Nest on Wheels – Keaton
Financial Planning for businesses and organisations, large or small have been given the revised dates for NEST or auto-enrolment of staff into a pension scheme. The Pensions Minister, Steve Webb, is keen to make auto-enrolment work. The financial planning implications of NEST are significant. For starters, all employers, irrespective of size must, by law, set up a pension scheme. Millions of people will be joining a pension scheme for the first time or a new scheme. A good pension scheme that is easy for employers to operate will be vital and Steve Webb is ideally looking for the system to be a “no brainer”.
The dates for the roll out across Britain are listed on the DWP website which can be found by clicking here. In essence though, small firms with less than 30 staff will begin auto-enrolment from 1st January 2016 – some 4 years off. The largest companies, with 250 or more staff begin this October, any firm with 50-250 staff must begin auto-enrolment from 1st April 2014.
Many employers are getting their pension scheme sorted out early to ensure that their system works and that they have a good pension scheme for staff. Of course, it also helps them look good and ahead of the game, which in times where possibly salaries are not keeping pace with inflation, this could be seen as a good compensation. NEST will require employers to contribute 3% with employees contributing 5% (less tax relief) so employers need to be planning for additional expenses and employees need to be planning for pension contributions that for many will be higher than most currently pay.
We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting
Nest: Auto Enrolment Dates2023-12-01T12:48:03+00:00

Nest: The Long Wait Continues…

1954: The Long Wait – Victor Saville
I wonder if you have your advent calendar? As the traditional countdown to Christmas begins, it seems that we will have to wait until next year for further clarity on the dates for NEST (or auto-enrolment of workplace pensions). The Government (well Steve Webbannounced that they were delaying the implementation for small firms – which coincidentally puts the date beyond the life of the current Government. This measure is an acknowledgement that the economic conditions are not terribly favourable to small businesses and additional costs may be unhelpful. However, the entire planned implementation is also under question as it had originally been intended that employers contribute a minimum of 3% of earnings, but only after at least 12 months paying 2%. So we now have to wait for the revised schedule which is promised early next year.
As a consequence there is now a row in process about the merits of delaying, which some argue is poorly thought through. My own experience of this matter is that many small businesses are not well prepared for NEST and would probably welcome the opportunity to have more time to get prepared. Those most aggrieved are those intending to supply the pension products and Labour Shadow Pensions Minister Greg McClymont who raises concerns about the impact of the delay on NEST’s ability to repay its £120m set up cost. I still find myself wondering why these things become so needlessly complicated.
We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting
Nest: The Long Wait Continues…2023-12-01T12:48:31+00:00

NEST: In a Flap about Pensions?

1951: Love Nest – Joseph Newman
There is speculation that the Government will announce that the auto enrolment (NEST) will be delayed for firms with 40 or fewer staff, perhaps by a year. This is political kudos, which would be seen as helping small businesses, by reducing the cost of implementation and ongoing additional pension costs. As this is little more than a “quoted source” there is no substance to this information until the Treasury says something rather more concrete. On Tuesday we may find something in Mr Osbourne’s Autumn statement, but until then, assume that nothing has changed.
If you would like to know when your firm has to comply with NEST (its currently intended staging date) then click this link. You will need the last two letters of the firms PAYE code if your firm has fewer than 50 staff.
There are now a growing number of organisations interested in running NEST qualifying schemes, even one from Denmark. The auto enrolment process is a fairly “involved” process. The largest employers – which includes the State institutions are due to begin NEST in October 2012. It isn’t until a year later that firms with fewer than 1,000 staff must set a scheme up (or have a compliant one). At the moment, the earliest a small firm (fewer than 50 staff) would need to have implemented a scheme is August 2014. In practice The Pensions Regulator will contact the employer a year before their outlined staging date. If you need help with your pension at work or what to know about the implications for your own existing pensions do get in touch.
We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting
NEST: In a Flap about Pensions?2023-12-01T12:48:34+00:00

Talking Money

The latest edition of Talking Money will be posted to clients today. If you cannot wait for your copy, please have a look at the resources section of the main website. This issue covers topics including SIPPs, Annuities, Tax and the new Flexible Draw Down Rules.
We have also added some updated documents regarding NEST, SIPPs and Inheritance Tax. Do take a look.
We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting
Talking Money2023-12-01T12:48:44+00:00
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