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. National Employment Savings Trust (NEST) is the new low cost pension scheme and is now the new name for these personal accounts. Any employer can use NEST to meet the workplace pension duties starting from 2012. The scheme is being designed specifically to meet the needs of low-to-moderate earners and their employers.

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 (NEST).

The Government are still consulting on the figures for the minimum income wage to join this arrangement.  Individuals 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 limits to be decided)
• 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. (Based on current available information) 

The exact details are still being worked out by the Personal Accounts Delivery
Authority (PADA).

To keep abreast of these and to make sure that your company is going to be 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.

A pension is a long term investment. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.

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