The New Proposed Personal Accounts

Personal Accounts: “A new way to save”, are due to be introduced by the
Government in April 2012 and as an employer you need to know what this is going to mean to your business.

If you have 5 or more employees you must already offer at least membership of a Stakeholder pension scheme, although you do not have to contribute to it.

From 2012, if you do not have en existing scheme that meets certain key standards that will make it qualify as a snappily titled “Quality Workplace Pension Scheme” (QWPS), you will need to set up one of the new Personal Accounts.

Employees aged between 22 and the State Pension Age and earning more than
£5,035, will be required to be automatically enrolled into the Pension Scheme every 3 years even if they decide to immediately leave the scheme (called “opting out”) although there is likely to be an option for really good schemes (with higher contribution levels) to delay the automatic enrolment for 3 months. As the name suggests they will have to be fully portable between employers.

If you already have an occupational or group personal pension plan in place, you will need to review your arrangements and find out whether it meets the new standards .

These are thought likely to include;-

• A minimum overall contribution of 8% (includes tax relief)
• A minimum employee contribution of 4% of earnings
• A minimum employer contribution of 3% of earnings between £5,035 and £33,540
• Certain investment choices such as ethical or green funds
• Basis of charges levied on scheme members
• How to cope with “opt outs”

If you don’t have a scheme in place then you are going to need to put one in place and make contributions of at least 3% by 2014.

The exact details are still being worked out by the Personal Accounts Delivery
Authority (PADA) and no doubt there will be further changes as we approach 2012.

To keep abreast of these and to make sure that your company is going tobe fully compliant with the new rules we suggest talking to one of our Corporate Advisers today to review your existing arrangements and make any necessary preparations in plenty of time.

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