Talking with an accountant this week reminded me that the proposed NEST pension reforms had not really filtered through or even hit the radar in some cases yet.
Small businesses owners can be forgiven in the current economic climate for having other things on their collective minds, but a start to understanding what NEST might mean for their businesses should be addressed sooner rather than later.
I’ve laid out the absolute basic details of the NEST proposals and would encourage you or your employer to give me a call to discuss the implications for your own businesses.
• The UK Government has agreed that all UK businesses, regardless of size, should offer a company pension scheme or enrol their staff into the new National Employment Savings Trust (NEST).
• From October 2012 UK employers will be required to automatically enrol employees into a ‘qualifying workplace pension scheme’. This auto enrolment could be to your existing company pension scheme if it meets certain criteria. If it does not meet the criteria or if you do not operate a company pension scheme then your employees will be enrolled into NEST, a low-cost pension scheme being introduced by the Government.
• Staff who are aged 22 or more and currently earning more than £7,475 a year will qualify.
• NEST is due to start in October 2012, with the largest employers joining first and the smallest joining by September 2016. Contributions from staff and employers will also be phased in. Until October 2016, the minimum overall level of contributions will be just 2%, with 1% coming from employers. From October 2016 to September 2017, total contributions will be 5% with 2% coming from employers. And from October 2017, the total minimum contribution level will be 8%, with employers contributing at least 3%.
• As well as the phasing in of compulsory contributions, legislation designed to minimise the burden on employers includes simple qualifying criteria for existing pension schemes and a simple compliance regime for new employer duties such as automatic enrolment.
Please find a more detailed factsheet here.
Roland Oliver