Ask any accountant what issue causes the most concern amongst his or her clients, and the chances are the answer will be workplace pensions.
Pensions have always been problematic, even back in the good old days when the only choices facing workers were either joining a final salary pension scheme, or taking out a personal pension.
Unfortunately, with the introduction of the new workplace pension scheme and the Pandora’s Box that is auto-enrolment, the system got even more complicated; so complicated in fact that many small businesses are failing to fully understand the reforms, and are therefore failing to take the necessary action to comply with the changes.
But surely the changes can’t be that complicated, can they?
Well, if the latest study from Sage UKI is accurate, the answer is yes, they can. Sage UKI found that more than half of UK businesses (56%) were still having difficulties coming to terms with auto-enrolment, and couldn’t say with any degree of certainty what the term actually meant. More worryingly 27% of these businesses were unsure what the auto-enrolment changes meant for them and their retirement. In what is perhaps the most damning indictment of the report, Sage UKI claims 25% of UK businesses are yet to receive any information on the revisions to workplace pensions; that figure equates to around 300,000 companies who don’t know what to do next or who to turn to for advice.
It’s not the changes that are the issue it appears. When the changes were explained to be the survey’s respondents, the majority agreed that the changes were positive and would make life better in the longer term. The issue is in fact awareness and education, or the lack of it. Sage UKI believes this issue is the one that needs to be addressed urgently.
Speaking about the findings of the report, Lee Perkins, managing director, of the start-up and small business division at Sage UKI, said:
“The way we save for retirement has transformed in recent years, but the lack of awareness about the change is a major concern. The fact there is such confusion and ambiguity surrounding the term means the language surrounding workplace pensions needs to be looked at and considered carefully.”
“The auto-enrolment crunch time is fast approaching. If you’ve not heard anything and have questions about what it means for you, you need to head to the Government website. This is something that will affect the majority of people in the country and will have implications for your retirement so it is vital you are up-to-speed on the changes.”
So where do we currently stand with workplace pensions and auto-enrolment? Well, currently any SME with between 90 and 159 members of staff is obliged to auto-enrol any worker aged between 22 and state pension age earning a minimum of £10,000 annually onto one of the new workplace pension schemes. Later on this year that figure will be reduced to 60 employees or more. Next year progressive changes and a phased roll out will mean that more and more small businesses will be required to provide a workplace pension to their employees. So it’s vital that businesses take account now and get expert advice from their accountants.
If your business is concerned about the new auto-enrolment qualifying scheme or has any other concerns relating to pensions and savings’ planning, speak to Steven Glicher accountants.
Our accountants have close contact with a number of independent financial advisers who can offer specialist advice on pensions, life assurance, investments, critical illness cover, income protection insurance, mortgages, elder care, private medical insurance and school fees planning.
For further information, call Steven Glicher accountants on 0161 485 8007, or email info@.