Our HR Consultancy team can help you put in place a strategy to minimise any disruption to your organisation caused by the Games.

One of the changes made was to the calculation of the amount a member could take as a tax free cash sum at retirement – now called the pension commencement lump sum (PCLS).

For defined contribution schemes, the maximum PCLS is now 25% of a member’s fund. Prior to A-Day, the maximum cash sum was calculated in a different way and could have been more or less than 25% of the fund; often it was considerably more.

If a member’s tax free cash sum on 5 April 2006 was more than 25% of their fund it is possible for the scheme to protect the entitlement to that higher amount.

The protected lump sum calculated as at April 2006 is increased up until the member retires using a complicated formula linked to the change in the level of the Lifetime Allowance.

HMRC has recently changed the rules governing the calculation of the eventual PCLS, resulting in many cases in a significant increase.

The PCLS is one of the most popular benefits provided from a pension scheme. It gives access to cash (as opposed to having to use the whole fund to buy an annuity) and it’s paid tax free.  Maximising this is therefore a valuable benefit for members and the latest change makes it even more important.

Schemes do not have to protect members’ A-Day cash entitlement, but not doing so could leave trustees and employers open to criticism from members and possibly the Pensions Ombudsman.

If you have not taken steps to protect members’ cash entitlements, it is not too late to do so, although historical earnings, service and fund value data relating to 2006 and before will be required, so the sooner it is done the better. If you would like further information or help with calculating and protecting members’ tax free cash entitlement, please contact us.

During maternity leave, employers are required to continue to provide the majority of ‘non-cash benefits’ that an employee was entitled to before maternity leave, including pension contributions and private medical insurance for example.

The situation becomes more complicated when an employee has entered into a salary sacrifice agreement in return for a non-cash benefit.

Due to the legalities of salary sacrifice, the resulting benefit then becomes an employer provided benefit. As a result, the employer may need to continue to provide the same benefits that the employee was entitled to before maternity leave, including any benefits that the employee was effectively paying for through salary sacrifice. This can include any pension contribution, even though the employer may be unable to recoup the cost because employees are not allowed to sacrifice their pay below statutory maternity pay.

It should be remembered that salary sacrifice can be very tax efficient for employees, and for certain benefits may also provide the employer with a significant cost saving through a reduction in National Insurance Contributions, which can be used to mitigate any costs incurred whilst employees are on maternity leave.

Unfortunately, due to the complexities of contract law and tax legislation, there is no ‘one size fits all’ answer to this issue.

If you should have any doubts about your existing arrangements or require any assistance with reviewing your salary sacrifice and maternity provisions, please contact us.

Care and attention to detail are essential. There are procedures that must be followed and the requirements of trust law and the trust deed and rules need to be adhered to.

Criticism of trustees in recent rulings by the Pensions Ombudsman has highlighted the need to follow the correct process, gather comprehensive information about potential beneficiaries including their financial circumstances and make properly considered (and justifiable) decisions. It is no longer an option to make a decision and not be prepared for it to be challenged or for the need to disclose how it was reached.

Dealing with the death of an employee is always difficult. Trustees need to be aware of their responsibilities and have an appropriate process in place rather than wait until the unthinkable happens. In the unfortunate event of the death of a member, they will need to act quickly and sensitively. It will, of course, be a difficult time for the family and other potential beneficiaries and anything that can be done in advance to make the process less painful can only be a good thing.

There are a number of things that can be done to ensure that trustees and employers are as prepared as possible.

Asking members to nominate beneficiaries is essential, but nominations also need to be kept up to date. To encourage this, members need to understand the benefits provided and how they will be paid.

In any event, are the nomination forms sufficient? Do they ask for the information actually required to assist the trustees in paying benefits? Do they cover spouses’ and dependants’ benefits, where applicable, as well as lump sum life assurance benefits? Is the range of potential beneficiaries clear and explained correctly to members? Where are completed forms kept?

If you would like further information or assistance with conducting an audit of death benefit provision and procedures, please contact us.

The rules around Annual Allowance, asset-backed contributions (to defined benefits plans), Qualifying Recognised Overseas Pension Schemes (QROPS) and Fixed Protection have either been changed, tightened or will have Regulations introduced to ensure operation and application is as intended.

Legislation will be changed to remove tax-relief on contracted-out employee contributions to defined contribution pension arrangements. This brings it into line with legislation abolishing contracting-out from 6 April 2012.

The Government has also stated it is “ready to act as necessary” regarding unfunded workplace pension schemes in line with other restrictions on pension tax relief, already implemented.

Small pot commutation rules will be extended to allow anyone over 60 the option to commute up to two personal pension pots of £2,000 or less, regardless of any other pension saving, from 6 April 2012.

HMRC rules relating to the payment of bridging pensions will be aligned with forthcoming changes to State Pension Age.

Finally, in response to the growing trend of including spouse or family member pension contributions in flexible benefits schemes, we will see legislation introduced to ensure that such an approach cannot be used to give either employee or employer a tax or National Insurance saving.

For further details of how these changes will impact your organisation, please get in touch.

 Make effective selection decisions
Get it right at the outset; profile the role and the type of person you need so that everyone involved in the selection is looking for the same things. Carefully assess skills, competence and experience of the candidate. Check for cultural fit. Be clear about the role and don’t oversell. Be sure to keep promises made.

1. Pay attention to induction
   Make sure the new hire has a desk and is connected. Recap on the role, introduce the team and explain how they work and connect. Explain the competencies and behaviours you are expecting. Explain company policy, systems, processes and facilities. Agree short term goals and mutual expectations for the first 90 days. Allocate a “buddy” to help them settle in quickly.
2. Use a probation period effectively
   Review the role and short-term goals set before the end of any probation period. Openly discuss achievements, improvements and development areas.
3. Develop performance Use a performance management cycle effectively. That is set goals, review them regularly, have formal sessions for two-way discussion and feedback, and plan for future development. Learn to recognise potential talent and discuss ways of harnessing it.
4. Communicate, communicate, communicate… Communicate informally, formally, individually and in teams. Communicate the company’s vision and strategy, making it relevant to the team and individual. Keep them connected with developments in the business, connect them to like minded colleagues and share company and market news.
5. Check your style
   Demonstrate your values consistently. Be open and fair. Give honest feedback, acknowledge successes and say thank you.

Our HR Consultancy team would be delighted to discuss with you the best way to put in place a strategy for employee retention in your organisation.

One of my favourite ways to help your children financially without allowing them the freedom to ‘party away any money you give them’ is to save into a pension for them. This simple planning method beautifully combines the benefits of tax relief, the effect of compounding returns and the potential for a higher risk investment strategy.

A £3,600 contribution would cost £2,880 with tax relief, invested over a 60 year period, could amass a small fortune at time when your child needs really needs it. The power of this concept is illustrated in the table below.

*assumed return net of charges. Past performance is no guide to future performance.  There are risks involved with investing money which may mean that the final value maybe different to those quoted above. The return figures quotes are not annualised returns and do not take into account market fluctuations which could alter the final value.

Delaying an investment can potentially reduce the impact of compounding returns. Contact me on 0207 614 1021 if you would like to help your children with their future.

The DRA was a reliable prompt for discussions about retirement. Keen to retire employees had the date etched on their minds and were vocal about it, and others, not so keen, understood their employer was within their rights to retire them. When the DRA was removed it became unlawful for employers to retire an employee unless the reason for doing so can be objectively justified. Employees can retire whenever they wish and are required to provide their contractual notice to do so.

Having just turned 65, Tottenham Hotspur manager, Harry Redknapp, says he has no plans to retire and, like Manchester United manager, Sir Alex Ferguson, who is 70, plans to keep on working in football. According to the Daily Telegraph, Redknapp says that he would not know what to do with his time as he has no hobbies.

Many of your employees will share this view. Having forged their careers for the past 40 or so years, on reaching 65, will still feel young enough to work another 5 or 10 years. How can you manage this?

1. Prepare for an older workforce. This includes making the most of the experience to hand as much as it does about managing cost and risk.

2. Keep employees informed and have open discussions about retirement.

3. Make sure your performance management process includes discussions about retirement intentions as part of the wider discussion about short and long-term goals.

4. Set out clear goals and performance objectives.

5. Help your employees prepare for retirement through retirement planning (see www.helmgodfrey.com for details of iRetire, the retirement planning service from Helm Godfrey).

6. Protect yourself from potential claims on the grounds of age by having a fair reason to dismiss and using a fair procedure.

7. Remember that a mutually agreed date that is well planned for helps both you and the employee feel good about the retirement and the years of loyal service beforehand.

Our HR Consultancy team would be delighted to discuss with you the best way to put in place a strategy for managing retirement in your organisation.

The Pensions Regulator, the Financial Services Authority (FSA) and HM Revenue and Customs (HMRC) are warning members and trustees about companies offering people the opportunity to get cash out of their pension schemes before they reach age 55.

There has been an increase in these sorts of offers recently.  Trustees should be on the lookout and warn their scheme
members that they should not be taken in by such website promotions, cold-calls or adverts encouraging them to transfer their pension to a new arrangement in order to access a cash payment or loan.

On receipt of any transfer requests, trustees should carry out all normal checks concerning the receiving scheme before making payment.

If trustees or members become suspicious about a transfer request, they should call one of the following:

• The FSA’s consumer helpline on: 0845 606 1234
• HMRC’s Pensions Anti Fraud Unit on: 0115 974 2147
• The Pensions Regulator on: 0845 600 0707
• Further information is available on the Pensions Regulator’s website at:
www.thepensionsregulator.gov.uk/regulate-and-enforce/pension-liberation.aspx
• The Pensions Regulator has also published a press release warning against early release pension offers and details of its investigations in two cases. This can be found at:
www.thepensionsregulator.gov.uk/regulate-and-enforce/pension-liberation.aspx

Contingent Assets and PPF Levies

Employers with Defined Benefits schemes must certify any contingent assets by the end of March 2012 if they are to be used to reduce their Pension Protection Fund levy.

Trustees are required to certify all contingent assets put in place since last March and re-certify any assets that reduced the levy in a previous year if they wish to continue using them for the 2012/2013 levy.

Fixed Protection

The lifetime allowance will be reduced from £1.8m to £1.5m from 6 April this year. If pension scheme members currently have benefits (from all sources) with a total value in excess of £1.5m they may claim ‘Fixed Protection’ and
retain the £1.8m allowance.  Trustees must certify that they have “no reason to believe that each guarantor, as at the date of the certificate, could not meet its full commitment under the contingent asset”.  The requirements apply to all ‘Type A’ contingent assets, and trustees have until 5pm on 30 March 2012 to certify new arrangements and re-certify exiting arrangements.  Members only have until 5 April 2012 to apply for fixed protection.

If you are concerned about any of the areas raised above, please contact Helm Godfrey using the contact details overleaf.

As financial planners we always start by helping our clients to articulate their vision and goals for their life. And to understand their values. This is because our aim is to help our clients realise their ambitions and live fulfilled lives.

We also encourage our clients to have a series of goals, so that some are achievable in the shorter term, rather than just planning for a dim and distant future! Different life stages bring new milestones and opportunities.

Once we understand what our clients want to achieve we can then focus our efforts on a financial plan that will help to deliver this. This way we can help you create your own financial freedom, so that you are in control of your money and your life.

To find out how the right financial planning can help you achieve your own financial freedom, please contact me on 020 7614 1021, or at sam.whybrow@helmgodfrey.com. An initial discussion will cost you nothing, and may transform your life.