Background
We have been involved with our long standing successful business client for many years, specifically looking after the management team. These key members of staff had a number of historic arrangements including Personal Pensions, Executive Pension Plans (SIPP’s) and salary sacrifice arrangements. Last year we started discussing the impending requirements for Auto Enrolment and how it would affect their business. Being a smaller company they were made aware of their staging date and the obligations at that time. Although they would not immediately be required to set up Auto Enrolment, this was nonetheless something they could not ignore.
Objectives
To implement an Auto Enrolment pension scheme.
Considerations
We put to the employer the following options:
1. Do nothing until staging date.
2. Commence pension scheme membership to all employees now, at the eventual minimum contributions 3% employer, 5% employee (8% total).
3. Introduce a scheme on a tiered contribution basis in anticipation of the requirements.
Recommendation
Accordingly, as at 1st October 2014, we introduced a new scheme where the employer will contribute 1% as long as the employee matches the contribution. Each year thereafter the employer contributions increases by 1% and once again is matched by the employee. At the end of 4 years the contributions will be 8%; 4% each.
What we have achieved for our client.
1. A qualifying scheme implemented smoothly, well before the required deadline.
2. A cost effective solution by the staging of contributions over a four year period.
3. An employer seen as being proactive by the employees for having instigated a scheme on a voluntary basis.
4. The provision of opportunity for all employees to generate high levels of retirement funding.
In addition to this we have subsequently reviewed the existing retirement plans of many of the employees and upgraded them where possible.
