Here’s our partner Aviva with some guidance on what to consider when setting up a workplace pension for auto-enrolment.
If you’re due to stage for auto-enrolment this year, you’re not alone. The Pensions Regulator estimates that over 500,000 small and medium-sized companies (SME) will auto-enrol their staff into a workplace pension in 2017.
Any small employer should think about the following things which are key to any business:
- Retaining your best people: A workplace pension is a very valuable benefit. That can be a really powerful incentive to stay with a company.
- Attracting talent: A workplace pension that offers a generous employer contribution could be the difference when a candidate receives two job offers at the same time.
- Being a paternalistic employer: Providing a workplace pension offers staff a chance to plan for their retirement.
- Allowing staff to retire at the right time: There is no default retirement age anymore so people can just go on working indefinitely. Aviva’s own research found that a third of workers over 50 plan to retire later than they had hoped and on average work for 8 years longer.
- Auto-enrolment is a legal requirement: All businesses must have a workplace pension. It’s the law now and The Pensions Regulator has the power to fine companies who don’t get their pension set up in time.
Choosing your workplace pension
Pensions aren’t ‘one size fits all’ and the nature of a business, the number and demographics of its employees, payroll set up and its future growth plans all need to be considered when looking for a pension provider.
Auto-enrolment applies to ALL employers, so even if you only have one member of staff, you still need to set up a workplace pension for them. Many providers will now let you apply for a workplace pension online using streamlined processes that will give you an idea of how much a scheme will cost in just a few minutes.
Contribution rates are going to rise
Currently the minimum contribution rates for an auto-enrolment pensions are 1% of salary from the employer and 1% of salary from the employee (including tax relief).
From April 2018 that will rise to 5% in total, with a minimum of 2% coming from the employer. Then from April 2019, this will rise to 8%, with a minimum of 3% coming from the employer. These are the minimums though and employers are free to pay in more if they wish.
A workplace pension is now the law, so businesses need to make it work. Putting money away for retirement is not just sensible, but is now essential. The full state pension is currently around £150 a week. If that is your only income from the age of 67, it’s not a huge amount of money to buy food, pay bills and enjoy a decent standard of living.
Got any questions? You’ll probably find the answers here.
We’ve teamed up with Aviva to offer you a discount on their workplace pension scheme. Aviva’s scheme is compatible with all types of payroll software, and can be managed online.
Aviva Life Services UK Limited. Registered in England, No. 2403746. Aviva, Wellington Row, York, YO90 1WR. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Reference Number 145452.