New Workplace Savings - National Employment Savings Trust (NEST)
The speculation is now over; the legislation starts in 2012
The Government currently intends to press on with the introduction of a national workplace retirement savings initiative.
The Pensions Act 2008 has introduced measures aimed at encouraging greater private saving which includes workplace pension reforms. Due to come into effect in 2012, this will be one step short of compulsory savings for PAYE staff.
What this means for employers
Businesses will have to start factoring in the cost of workplace pensions to their plans if they have not done so already. The important task is to start planning in advance now.
The Department of Work and Pensions has published its list of implementation stages for all UK employers and the contribution levels for this new regime will be phased in from 2012 depending on the number of employees within each organisation.
Employers will have a 3 month window to enrol new staff into a QWPS (Qualifying Work Place Savings) scheme and the auto enrolment process will occur every 3 years for staff even if they initially opt out.
Whilst NEST is a new pension scheme that will be available to all employers, it is important to stress that existing group or stakeholder pension schemes will be permitted to continue subject to receiving QWPS status. The status depends only on the level of contributions made by the employee and employer.
If the current provisions do qualify under the rules, the employer will need to self-certify its qualifying or QWPS status with the Pensions Regulator.
Employers will therefore not need to abandon their existing workplace pensions in favour of NEST as long as it can be adjusted to achieve QWPS status.
The marketing for NEST and workplace savings will begin next year; we understand the focus of this campaign will be to paint employers in a negative light if they do not provide a workplace pension for staff.
How can we help?
In order for employers to succeed in this field, advice needs to be sought from an independent financial adviser who already works in the corporate pensions market.
Sound Financial Management Ltd has a long established history of administering employer pension schemes; we look after both national and local clients around the UK. We can offer you an independent review of your current arrangements and recommend what needs to be done to ensure that you are compliant with the new rules.