What changes will businesses need to implement to accommodate the governments new pension law?

Aug 24

What changes will businesses need to implement to accommodate the governments new pension law?

One of the big talking points amongst modern business owners is pension auto enrolment and the repercussions the new legislation may have for the everyday running of their business. When it’ll be phased in, what measures will need to be in place and if it’ll lead to spiralling costs are all high on the agenda as people urgently seek advice.

Many in the business community will see the legislation as further red tape, particularly those who operate smaller scale enterprises. Perhaps though, these are the people who should worry the least for now as the implementation of the legislation will be phased in over a 5 year period, culminating in 2018 when all businesses regardless of size will be incorporated in the move.

The first businesses which need to prepare are a core of 9 of the biggest businesses with the most eligible employees. Those with between 50 and 249 workers need to implement the scheme between 2014 and 2015; 30 to 49 staff members, will be incorporated at the end of 2015; and those with fewer than 30 workers are scheduled to be full involved by 1 April 2017.

This gives smaller businesses some time to play with but it doesn’t mean that they should linger in a state of confusion. Businesses will need to implement pension schemes that meet the minimum contribution criteria the government has put forward – which is fairly minimal. They can do this by setting up occupational or stakeholder schemes, which many people will already be familiar with (the government pushed stakeholder pensions into the limelight as of 2001), or they can use the government approved NEST scheme which could fill any gaps in the market often where expertise may be lacking. This isn’t to say that NEST is necessarily a lesser scheme though.

The transition should be less painful than many predict. The NEST scheme will fit nicely into many small scale businesses and further private pension provision from the likes of www.nowpensions.com should be seen as an opportunity in many senses. Staff relations can grow and loyalty may increase.