Found – 500,000 extra employers
The Chancellor may be reviewing the whole basis of pension taxation, but the process of automatic enrolment into workplace pensions rolls on, unaffected.
Three years ago the Pensions Regulator’s annual report on automatic enrolment report estimated there would be 1.3 million employers who would need to comply with the requirements of automatic enrolment. However, in the summer 2015 report that estimate was raised by 500,000 – over a third – because of “an increase in the number of new companies that have started up, and fewer going out of business than was forecast”.
The extra 500,000 employers are all at the small (5-49 employees) or micro (1-4 employees) end of the scale. They have generally not yet reached their ‘staging date’, when automatic enrolment is legally required to be in place. Some, such as employers of a children’s nanny or carer, are only just becoming aware of their responsibilities.
The large jump in employer numbers will mean that in the peak quarter (summer 2017), 350,000 of them will reach their staging date and need to comply. The previous estimate had set the peak at 220,000. To put those numbers in perspective, in the year to 31 March 2015, 35,000 employers completed the automatic enrolment process.
If your business has not reached its staging date, the jump in the regulator’s estimate is not good news. It will create more demand for advice in a pension sector that is already under considerable pressure from a relentless flow of pension reforms. The regulator currently suggests that you should start planning approximately 12 months before your staging date. However, given the increased employer numbers, we would recommend that you start even earlier – some bottlenecks look inevitable. We can then guide you through the various stages of automatic enrolment and help select the appropriate pension arrangement for your workforce.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances. Occupational pension schemes are regulated by The Pensions Regulator.
The information in this article does not constitute advice and should be used for informational purposes only. This content has been provided to Helm Godfrey by Taxbriefs.