Torquil Clark: West Midlands businesses to take pensions burden
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Ian Hill |
THE market conditions of 2008 caught pension schemes both Defined Benefit (Final Salary) and Defined Contribution (Money Purchase) off guard and demonstrated that pension schemes should undertake regular reviews to monitor and control risk not only to improve ‘governance’ but to avoid problems in the future. With the Government committed to reviewing its predecessor’s policy of making employers automatically enrol and pay employer contributions (for all but the lowest paid employees aged between 22 and State Pension Age) into a pension scheme we are offering a systematic pension scheme review that will systematically highlight key risk factors and their relevance for pension scheme sponsors. Much of the cost and administrative burden associated with the new regime will fall on employers. From fulfilling the employer duty to make minimum pension contributions to automatically enrolling employees into qualifying pension schemes, it is employers who will face a new HR landscape from 2012 and it is employers who will suffer the financial penalties of not complying under a wide-ranging enforcement regime led by the Pensions Regulator. There will be higher costs for all employers attributable to both pension contributions and administration. Depending on the make-up of the workforce it could add up to 3% and higher if you include additional administration costs to the HR bill. Employers who have large numbers of low to moderate earners, part-time employees and temporary, seasonal or flexible workers could face a significant rise in their labour costs and suffer the resulting hit on the bottom line. For those employers that have survived the economic down turn the additional costs from fulfilling their employer duties may prolong the wait for recovery with the potential increase in costs of employees benefit packages. The review of auto-enrolment into pension schemes comes at a time when the Chancellor confirmed that the government will be consulting about phasing out the default retirement age from April 2011 giving more for the employer to think about and manage. If you are interested in a free review and risk report for your business call Ian Hill on 01902 576707 or email ian.hill@torquilclark.com More articles in
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