Mary Poppins’ Pension

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Pension automatic enrolment is getting closer to home.

The roll out of automatic enrolment of employees into pension schemes started back in October 2012 with the largest employers, like the four biggest supermarkets. The logic was that these huge organisations would have the necessary resources to start the process quickly and efficiently. Woman with umbrellaSince those early days, the size of employers required to enrol all eligible employees into a company pension scheme has been shrinking. As of this month, the rules begin to apply to those with fewer than 30 employees.

This is the lowest and last threshold and covers nearly 800,000 small and micro employers. In this group, the precise timing (known as the staging date) for when automatic enrolment applies is driven by PAYE coding letters, which can have unusual effects. For example, two employers working from the same premises might have staging dates two years apart.

The first group of employers with less than 30 staff have now reached their staging date of 1 June 2015 (to check your company’s staging date, please click here). This has prompted some press coverage about the employment of nannies. Parents who employ nannies directly fall within the automatic enrolment rules, even if the recruitment of the nanny was originally via an agency. The initial pension cost will be modest – generally 1% of earnings above £5,824 – but the rate will rise to 2% in October 2017 and 3% a year later.

The pensioning of Mary Poppins is a reminder of the way that automatic enrolment is working its way through to all employers. If you are an employer – of any sort – make sure you know your staging date and understand your responsibilities. Failure to do so could lead to escalating fines from The Pensions Regulator. If you would like to speak to one of our corporate financial planners, please give us a call.

The value of your investment can go down as well as up and you may not get back the full amount you invested. The value of tax reliefs depends on your individual circumstances. Tax laws can change.

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