issue:
1 March 2013
Workplace Pensions Update
within the regulations between 1 August 2015 and 1 April 2017.
Staging dates for small employers
We welcome the finalisation of the staging dates timetable as it means advisers can now help employers prepare with a degree of certainty.1
Although the final staging dates for employers with 250 or more people in their PAYE scheme has already been announced, we have been waiting for confirmation of the staging dates for employers with less than 250 people in their PAYE scheme. The Department for Work and Pensions (DWP) (www.dwp.gov.uk) has now confirmed these staging dates for these employers and that all employers who employ at least one person are still in scope. Although the dates themselves have not changed since the previous draft regulations, there is an amendment as to how small employers who are part of a larger PAYE scheme are defined – this then determines their staging date. Before the amendment, they were defined as employers who had less than 50 ‘Full Time Equivalent’ (FTE) employees. This definition involved a calculation to work out how many FTE employees there were.
They are now defined as employers who had less than 50 workers as at 1 April 2012. Therefore, the amendment basically makes it easier for small employers to identify if they fall within this category. The new regulations also mean that these employers can choose whether to have a staging date based on the larger PAYE scheme or a later date pre-defined
Thomas Carroll Group PLC
t
029 20 86 95 31
Pendragon House, Crescent Road,
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info@thomas-carroll.co.uk
Caerphilly CF83 1XX
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Salary exchange and automatic enrolment Salary exchange agreements generally have to be set up for at least 12 months to satisfy HMRC requirements. However it is possible to specify ‘lifestyle events’ that allow workers or their employer to revoke the agreement before the 12 months is up. But it was not previously clear whether opt out under the automatic enrolment rules would be an acceptable reason to revoke a salary exchange agreement. HMRC have now confirmed that an automatic enrolment opt out will allow workers or their employer to revoke a salary exchange agreement. In addition, they have confirmed that opt outs do not have to be specified as ‘lifestyle events’ to allow this to happen. Salary exchange is an efficient way in which employers can save on the cost of automatic enrolment. This is a welcome clarification from HMRC that means employers and advisers can be confident that they can use salary exchange in an automatic enrolment scheme without breaching any HMRC rules.
Small pension pots and automatic transfers
Why Thomas Carroll?
The Government have issued their response to the small pots consultation. Here are the highlights:
We have the honour of being named ‘The Chartered Financial Planners of the Year 1 by the Personal Finance Society – the body which grants Chartered status to IFA firms and individuals.
The DWP estimate that once automatic enrolment is up and running, there could be around 50 million ‘dormant’ pension pots in the system by 2050 They favour the ‘pot follows member’ approach so that when people move jobs, their pension pot moves with them automatically
Automatic transfers will only be available for automatic enrolment schemes so legacy and defined benefit pots are not in scope at this stage Automatic transfers of small pension pots should be an unadvised process People should be allowed to opt out of an automatic transfer if they want The Government remains committed to abolishing short service refunds from trust based schemes but want to look at ways of allowing ‘micro pot’ refunds within all pension schemes
Two key questions that need to be considered are the size of pension pot that can be automatically transferred, and the size of pension pot that can be automatically transferred without advice.
Thomas Carroll Group PLC
t
029 20 86 95 31
Pendragon House, Crescent Road,
e
info@thomas-carroll.co.uk
Caerphilly CF83 1XX
w thomas-carroll.co.uk
Our title demonstrates the excellence, commitment to professionalism, training and development of our people which our clients and professional colleagues have come to expect from us. We have recently been awarded Corporate Financial Planning Firm of the Year2 and Retirement Planning Firm of the Year3 by Bankhall Group, the UK’s largest distributor of financial services.
Contact us If you wish to discuss the content of this brief in more detail please contact Mark Eedy directly on 02920 855 245 or e-mail mark.eedy@thomas-carroll.co.uk 1 Awarded by the PFS in 2010 2 Awarded by Bankhall Group in 2012 3. Awarded by Bankhall Group in 2010 and 2011
Tax and legislation are liable to change. This information is based on our current understanding of UK law and HM Revenue & Customs practise and legislation we believe may apply in the future. No guarantees are given regarding the effectiveness of any arrangements entered into on the basis of these comments.