Pension Reform Act notes

How will you be affected by the Pension Reform Act 2005? – Personal Accounts

Personal Accounts – What’s it  all about?

 Personal Accounts are individual retirement savings plans. Irrespective of who wins the impending general election we are likely to see the introduction of Personal Accounts in 2012.  They are doing this to “make saving for retirement the norm.” It helps them counter the problems in continuing to fund and maintain the current state pension system.

 Personal accounts have to be made available, through the employer, to all employees aged between 22 and state retirement age.

  • Contributions are based upon their earning between £5035 and £33450 per annum. 
  • The employer contributes 3% of earnings and the employee 5% of earnings.
  • Only an employee can opt out – an employer cannot.
  • In basic terms it is a possibility that your annual wage bill could rise by 3%.

 What should you do now?

Ask yourself two questions –

  1. Are my current retirement provisions for my employees “fit for purpose” considering the new legislation?
  2. Considering your current workforce, how would you like to proceed?

Eg. Do you have seasonal workers, part-timers, high staff turnover?

Summary

With only two years until Personal Accounts become reality, you need to consider your options and discuss it with us so we can plan for their introduction.

Recommended reading – www.dwp.gov.uk/docs/pa-personalaccountsfull.pdf

For further details contact Mike Thwaites on 01765 600681, email mike.thwaites@euraaudituk.com or contact a partner near you

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