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Call Richard Cook: 07770 575 122

email: richard@theinvestmentandretirementcoach.co.uk

Auto-enrolment – 5 facts you must know

Over the next 12 months thousands of small businesses will start to be phased into the Government’s auto-enrolment pension scheme. There is loads of information out there. Just google “auto-enrolment” – you will have hours and hours of happy reading and will probably still be confused.

So here are just 5 facts you really must know:-

  • There is no way out unless you sack all of your employees and never employ anyone again. If you are a director with a contract of employment you will probably even need to sack yourself!
  • Understand that this is no more than just another employment cost. Auto-enrolment schemes by their very nature can never be good pension schemes. If you really want to encourage and help your employees to achieve good pensions an auto-enrolment scheme on its own will rarely be the right answer.
  • This is a payroll and HR issue not a pension issue. You need to establish whether your payroll software or bureau can deal with the auto-enrolment calculations. Establishing which of your employees is an “eligible jobholder”, a “non eligible jobholder” or an “entitled worker” and what their contribution should be cannot be done manually.
  • Your starting point should be whoever provides payroll support not your pension provider. Unless you have a small number of highly paid employees already making substantial pension contributions the chances of your existing scheme meeting the auto-enrolment conditions are virtually nil. The problem is that you may find yourself paying substantial fees just to find that out. In my experience to date many employers will finish up with both a scheme providing good pension benefits and an auto-enrolment scheme to meet their legal obligations.
  • Be very wary of taking advice from your existing Financial Adviser/Pension Provider. The Auto-enrolment schemes that provide the best value for money do not provide any remuneration for advisers and they therefore have no way of helping you without agreeing a fee structure. With average fees in excess of £150 per hour you could end up with a big bill in no time at all.

Auto-enrolment

So what should you do next?  Here is a short list of links which will get you started.

Some of you will be able to do all that is necessary online once you have established that your chosen provider and payroll provider can really talk to each other.

If you need some extra help and guidance we will be running a series of workshops over the next few months at our office in Winchcombe, Gloucestershire. This will be for small groups and very much hands on. An on-line version is on the cards but not yet ready to go. We anticipate a large demand so please pre-register by using the “request information” box either on the right or below depending on how you are accessing this blog.

Finally don’t forget to sign up for blog updates and share this blog with your friends by using the buttons to the right.

PS. For the record, my daughter’s business has decided to use Now as their provider (NB – this is not “advice”).

 

IMPORTANT INFORMATION
This document and our on going services are not personal advice. We'll give you all the help and guidance you need to make your investment and retirement decisions, but we can't advise you. If you're not sure whether you need regulated financial advice we can put you in touch with a suitably qualified and experienced regulated adviser. Because we are not regulated by the Financial Conduct Authority you will not have access to the Financial Ombudsman Service in respect of any complaints. If you use one of the "no advice" on line services to handle investment transactions they will be Regulated and you will have access to the Ombudsman and The Financial Compensation Scheme in respect of their services. The value of investments/pension plans can fall or rise depending on market performance. The Retirement Team and The Investment and Retirement Coach are trading names of Capture Success Ltd Reg No 01825075 Tel 07770575122

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