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Pension Auto-Enrolment

BBTimesPieceYou may have seen the recent pension auto-enrolment TV campaign and wondered what it is all about and why it has been introduced? The government owes in excess of £1 trillion and can no longer afford to support the UK’s ageing population through retirement especially as 22% of us are not saving anything for our supposed golden years.

The government’s answer to this is twofold; the introduction of pension auto-enrolment and changes to the default retirement age. In simple terms we are all living longer but are now having to work for longer in order to finance our retirement.

The Government has implemented pension auto-enrolment to encourage greater private pension saving and put the onus on employers and employees shoulders to plug this funding shortfall. This initiative is already here and upon us and the introduction of automatic enrolment of eligible employees into a workplace pension scheme has already commenced with approximately 2 million workers having been enrolled before the end of 2012.

From a business perspective it is a mandatory requirement to comply with auto-enrolment for all eligible employees from October 2012. This is a phased period of enrolment so the first consideration you must address as an employer is when it commences for your business. Some of the other key questions you must consider are how much is it going to cost the business, what is the cash flow impact and what pension scheme options are open to you as a business.

As an employee the upside to auto-enrolment is your employer’s contribution but don’t forget you are also expected to contribute to your pension pot which will be deducted from your salary. The other point is any potential future pay rises may be restricted as your employer may not be able to award these with the burden of contributing to employees pension funds.

The key message is to make sure you are aware of the impact these regulations have on you and your business and don’t forget the need to plan, implement and communicate a strategy to mitigate the impact of auto-enrolment.

At Clarke Nicklin we have advised numerous businesses through the maze of options, alternatives and possibilities so make sure you don’t bury your head in the sand and let someone else take the confusion out of pension auto-enrolment.

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Clarke Nicklin House, Brooks Drive, Cheadle Royal Business Park, Cheadle, Cheshire, SK8 3TD. Registered Number OC309225.
The firm is registered to carry on audit work in the UK & Ireland. Details about our audit registration can be viewed at www.auditregister.org.uk under reference number C001178544. The professional rules applicable are the Audit Regulations and Guidance which can be found at www.icaew.com/regulations, and the International Standards on Auditing (UK and Ireland) which can be found at www.frc.org.uk/apb/publications/isa.cfm.