A New Pension Plan For The UK

The UK is rolling out a new pension plan that could be problematic for small business owners. Some eleven million UK workers are not enrolled in pension schemes. The government is trying to avoid a crisis by ensuring that workers have a pension when they retire. However, the price tag could be too high.

The initiative, known as auto-enrollment, gives employers a deadline to enroll employees in a pension scheme. Smaller businesses are the most affected. Many do not have the business acumen to select the right pension plan, and they don’t have the finances to participate. Business owners should talk to an independent financial adviser for auto enrolment pension information. Pension Auto Enrolment Guidance helps companies in Liverpool, Manchester and Chester. Each employer has a staging date when a plan must be in place. Failure to have a plan could result in a fine of up to five hundred pounds per day. Program rules cover just about everyone working in the UK:

every worker must be enrolled in a pension scheme, unless they already are
covered employees must work in the UK, and be between age 22 and the state pension age
workers must earn more than 9,440 pounds per year, or 787 pounds per month

The whole burden will not fall on the employer, because employees are expected to contribute to the plan. In addition, the government set minimum employer contribution levels. Small businesses are required to start auto-enrolling in 2015, and staging dates are staggered over a three-year period. Each employer has been given a staging date, which is directly tied to their contribution amount:

Staging date between October 2012 and September 2017 (two percent contribution made to pension-one percent from employer, one percent from employee)
Staging date between October 2017 and September 2018 (five percent contribution made to pension-two percent from employer, three percent from employee)
Staging date of October 2018 (eight percent contribution-three percent from employer, five percent from employee)

Businesses must fall into specified categories in order to postpone staging dates. Auto-enrollment will be burdensome for some businesses. However, a new financial package may attract better employees.