Pension Reform

2012 will see the start of a rolling introduction of new pension rules which apply to all businesses, even those with only 1 employee.  Most smaller businesses will be required to comply with the rules from 2016 onwards, giving time to introduce the scheme in a way to suit both employer and employees.

Employers will be required to auto-enrol staff into a scheme, although staff may subsequently opt out of the scheme .  Overall contribution into the scheme (for employer and employee) is likely to be around 7% of salary(which includes a 3% employer contribution).

The salary levels, including overtime, commission and bonuses to be taken into account are between £5,515 and £38,185.  Workers between ages 16 and 21 or over state pension age but under age 75 won’t be automatically enrolled, but can ask to be enrolled.  Workers earning under £5,715can also ask you to arrange a pension for them, but the employer would will not have to pay into the scheme, and the scheme in this case need not be a qualifying one.

We strongly recommend that employers start planning early for the changes, perhaps building up contributions to the required level by 2016 for small businesses.  Payments are likely to be collected as a payroll deduction and Layton Lee will be pleased to advise and out payroll bureau can provide the relevant processing.  For more information or advice, please speak to one of our partners.