Week 2 - 2012 Pension Reforms – Why and When?
Author: Jackie Fancourt, a pension expert at Jay Financial
Last Updated: 11/10/2011 9:11:57 AM
Summary
Most of us are not saving enough for retirement. With people living longer, and the State pension benefits becoming increasingly inadequate the Government recognises radical reforms are required if individuals are to make adequate provisions for themselves. The solution, rather than increase taxes or expect people to be poorer in retirement, is a combination of making people work longer and forcing employers to set up and make contributions to a pension scheme. Research by the Department of Work and Pensions shows that in 2010, 83% of employers had no staff pension scheme in place. Not surprisingly the majority are small employers, however, there are still a substantial number of larger employers (250+ workers) who have yet to arrange a pension scheme.
Article
When it's happening
The employer duties will be introduced in stages from October
2012 to September 2016. Larger employers will have their duties
imposed first, smaller employers last. The date on which the
employer will be required to comply is known as the staging date.
The Pension Regulator will generally determine the size of
the employer based on the Pay As You Earn (PAYE) scheme information
available to them on 1 April 2012. Any fluctuation in the number of
people in the PAYE scheme after that date will not change the
staging date. Determining the staging date is the first step
all employers should take. Then, once an employer understands
the duties they can build a timeline and budget for the changes.
Micro employers who share a PAYE scheme, and employers who
employ certain types of worker where there is no need to operate a
PAYE scheme, for example, where workers are employed on a personal
service contract and there is no requirement to deduct and pay PAYE
tax will have a staging date of 1 February 2016.
A full list of the 43 staging dates based on changes proposed by
the latest DWP draft regulations can be found in the Employer
staging dates table available from The Pensions Regulator's
website:-
http://www.thepensionsregulator.gov.uk/pensions-reform/staging-date-timeline.aspx
Next time - Identifying the different categories of worker
If you have further questions you can email
pensionhelpdesk@jayfinancial.com