Pensions experts say that a review of auto-enrolment is needed following the May general election to help smaller employers, like dentists, and their employees meet the cost of contributions.
The call came from the Association of Consulting Actuaries (ACA) as it published a report on 4 January into pension savings, based on a survey of 414 businesses employing between one and 249 employees.
The report found that most employers implementing auto-enrolment were paying the current minimum employer contribution, or close to it.
The ACA said it was concerned with more than one million smaller employers yet to come on board – including many dental practices – there could be significant challenges caused by the short time many businesses and workers would have between starting auto-enrolment in 2015 or 2016 and increases in contributions between in 2017 and 2018.
Until 30 September 2017, employers’ minimum contribution is one per cent of a specified band of earnings – between £5,772 and £41,865 in the 2014-15 tax year – rising to two per cent from 1 October 2017 and then to three per cent from 1 October 2018. Employees will see contributions rise from 0.8 per cent of band earnings to 2.4 per cent from October 2017 and then to four per cent from October 2018.
The ACA said that the government elected in May should undertake an immediate auto-enrolment policy review to assess whether “enhancements” were necessary to help employers and employees cope with increases in contribution rates.
Meanwhile, government research has found that employers who went through auto-enrolment in 2014 recommend starting preparation between six and nine months before their staging date, the date on which they must start auto-enrolling. The findings came in a Department for Work & Pensions survey of 50 businesses employing between one and 499 people, published in November.
Milsted Langdon Financial Services offers a fixed price service to support businesses with their auto-enrolment planning and implementation, including a bespoke report, based on a detailed payroll analysis, which will assess:
- which method of calculating pension contributions costs is best for you
- how costs will build up over the next five years
- how much can be saved by paying contributions on a salary sacrifice basis.
The report will also cover:
- automatic enrolment scheme requirements
- when the changes will affect you
- what you need to do – and what will happen if you do nothing
- a workforce assessment, to identify which staff fall into each category of worker
- your duties as an employer for each category of worker.
Our fixed price fee is fully inclusive of all these services. The fee will depend on the size of your payroll but as a guide would typically be £1,500.
For more information on the service, or to arrange a free, initial, no obligation meeting to discuss how we can assist with auto-enrolment issues, please contact us.