If you're lucky........

Well Hello again!

This week my blog focuses on Auto Enrolment/Workplace pensions and in my own way, I think the picture above will become a distinct possibility. I stress this is, as the blog says 'Victors' View' and no one elses!!

Most of my clients are now starting to receive a letter from the 'TPR' - The Pension Regulator. Already, I have a few calls asking 'is this a scam?' or 'what should I do?' or more frequently 'Ah, I've got over a year to worry about it, I'll talk to you later'

Auto Enrolment, or Workplace pension is the terminology for a call to arms to enrol  all who employ somebody, who is over the age of 22, below the age of 65 and earns more than £10,000 per annum  into a pension scheme(there are other caveats, but this is the crux!), so if you're and employer who employs, or you're an employee and you fit the above criteria-this affects you. Auto Enrolment until now, has concentrated on larger companies who started (or 'Staged' as the term is known) in October 2012. The staging (or enrolling perhaps!) is now focussed on those companies with around 50 employee's and over the coming two years, those who employ one other person than themselves will come into focus-we're eventually peaking at around 180,000 companies every month will need to enrol/stage/join.

This is a mammoth task! especially, when you see there are around 25,000 registered financial advisers and maybe 50 companies who will facilitate this. Even now, maybe a couple of thousand companies each month need to get themselves set up, but you won't see it in the press or anything, maybe from the Chamber of Commerce or Federation of Small Businesses.

Even talking to the FSB, they admit feedback from members 'apathetic' and they feel 'its another 'Stakeholder' pension scheme' (stakeholder was introduced in April 2001 and required those with 5 employee's to have a scheme available for those who wanted to join, by the September of that year, the Atrocities of the Twin Towers in New York happened which obviously changed the focus). This time around, it is different. Auto Enrolment was a Labour idea, helping those who do not benefit from company sponsored pension schemes like the public & private sector-this was aimed at the Micro, Small & Medium sized privately owned businesses.Launched by the then chancellor, Alistair Darling in 2008, it was to equalise the pension playing field, to stop the dramatic drop in income from employed, to retirement. So a change of government-if there is one next year-is unlikely to halt this and the TPR does have teeth, with Dunelm Mill recently being publicised as to have received a warning.

As we approach the smaller sized companies, we will find more of them and possibly, as the pension companies fill up with bigger sized companies from the big supermarkets, high street stores etc, by the time a 5 or 10 man business approaches them, they may have more than they need..leaving the employer with little choice as to what company to use.

A company and an employee has to also consider the cost 2, 3 & 4% of employee earnings will go into a pension for an eligible individual and up to 3% for the employer over the next few years. Surely a company & an individual would want to know this more than a year in advance, so they could plan?

Yes, opting out is available, but to opt out, you have to be in first and 3 years after opting out, you'll be put back in.

So all I ask, is if you get that letter from The Pension Regulator-act on it. Talk to your business mentors, talk to The Pension Regulator. By all means talk to your accountant, but it is likely that he or she will only look at this from a payroll perspective and that's not what its all about.

Give yourselves time to think and adjust-perhaps this coincides with the overall salary package you want to pay-perhaps it means something else.

Please speak to your Financial Adviser. if you have one, if not go to unbiased.co.uk or give me a call. Most advisers will offer a free consultation without obligation.

This can be set up and administrated by yourself as a company owner, absolutely no problem at all, in the same way, that you can do your own filing of accounts and run your own payroll, my question is "where is your time best spent?" as the old saying goes, 'A ship is safe in the harbour, but that's not where it was built to be'

Have a great rest of week and weekend,

Victor

You can't touch that!

Hello!

This week my thoughts were focussed on the strike that went ahead on Thursday. Unauthorised or not, it got me thinking as to why people would strike-& include changes to pensions as a reason to. Now don't get me wrong, I'm all for democracy and if someone feels strongly enough that all aspects of negotiation are futile and to strike is the only way, then so be it.

But.....I do find it difficult when the strike includes 'changes to pension'. We are about to see some of the biggest legislative changes in pension history. One potential change alone allows someone to access their whole pension fund in its entirety-what's wrong with that and why strike about it? we see that the vast majority of public sector workers are exposed to either Final Salary Pensions (aka defined benefit) or high level Money Purchase pensions (aka defined contribution) schemes, if the Final Salary scheme is closed to new members (unlikely, but worth noting). In some instances a Final Salary scheme could cost an employer 20%-30% of an employee's salary per year to run, whereas a Money Purchase scheme might cost an employer 15-18% of an employee's salary each year. That's a huge shift from the Private sector, where virtually all but a few are in Money Purchase schemes, receiving larger contributions from those working in larger organisations, Multinationals, Banks, etc, let alone those working for private companies or individuals...so, when compared to others, the Public sector pension regime looks too good to strike about..doesn't it?

I get the issue on pay. receiving 1% salary increases, being asked to work longer hours for the same money will increase stress levels within the work environment & I'm sure work is also brought home too-even if its to rant about 'what a day I've had' but isn't this compensated by aforementioned pension contributions? these guys will eventually retire on up to two thirds of their final salary..will you?

Now..I'll tell you a brief story...I worked for a bank for 17 years and I was lucky enough to have a Final Salary pension. I also saw zero per cent salary increases for around 6 years. I saw my bonus structure change, meaning I had to do more business, for less money. I also had my retirement age changed on my pension, from 55 to 60 meaning I had to work more years to get the same level of pension. Unite/Unison were enraged, we should strike..& some did. I didn't strike, because I didn't think my voice wouldn't change anything, however, it did make me stop and thing and eventually it became one of the myriad of reasons I left & set up my own business, but I digress.....

I was working with people who had been at the bank since they were 16 years old and were now 50. They spent more time at the Bank than with their partners and children!!!

I was orphaned while at the bank, I was married, 3 times a father and divorced whilst at the bank..the security of income and a fantastic pension was the reason the majority of people I came into contact with stayed at the bank. To alter what was fundamental to their life (I wasn't the only one divorced due to work overload and bringing all the days issues home with me), their reason for staying, enduring the workload, having time off with stress etc, etc, was the benefits & when you mess with benefits, you are shifting Teutonic plates because the sacrifices made to and by husbands, wives & families were and are brought into sharp focus and that's why I think the changes to work & pensions causes such action. Not the change per se, but the emotion it brings...As I say, You can't touch that, its potentially Pandora's Box.

Now some reading this will say that I'm out of my depth as I'm no analyst and I agree, but, I have an opinion and as we are a democracy..........!!!!!!!

Have a great weekend and I hope you can switch off mobile data and enjoy it

Victor