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Tag Archives: Pensions
How to use the new UK pension rules to make £500….
Here is the theory….
- You pay £8,000 into a defined contribution pension fund
- Its topped up by £2,000 (tax back from the government)
- So that’s £10,000 in your pension pot
- You take out £2,500 (25%) tax free
- You then pay 20% tax on £7,500 = £1,500
- So £8,000 in + £2,000 credit – £1,500 tax = £8,500 which is £500 more than you paid in
This is based on the HMRC rules.…
You must be at least 60 years of age to take your pension pot as a lump sum.
You may qualify to take all of your pension pot as a lump sum if:
-
one of your pension pots is worth £10,000 or less
If a lump sum is paid instead of a small pension before you started to get that pension, only 75 per cent of the lump sum is taxable.
There will be some charges from your pension provider but these should be small, take look at this list for a comparison
ABI data suggest that 25% of pension pots are less than £10,000
steve@bicknells.net
3 ways to comply with Employer Auto Enrolment Obligations
Auto Enrolment has arrived and there is a lot to do……
http://www.youtube.com/watch?v=XDnkEd8zCzM
The Pension Regulator website will help you create a stage by stage plan working back from the date when you need to start (staging date), it is a useful planning tool http://www.thepensionsregulator.gov.uk/employers/planning-for-automatic-enrolment.aspx
Most schemes will be set up with one of the following providers:
NEST – National Employment Savings Trust – NEST was originally created by the government – limited help for employers
The Peoples Pension – B&CE – B&CE is well known in the Construction world, they have online tools to help you
Now: Pensions – ATP (Denmark) – 45 year experience in pensions and many awards
You could use another provider and you should take independent expert advise, never give pension or investment advice unless you are qualified to do so.
If you are asked for advice remember to say ‘I know nothing’
http://www.youtube.com/watch?v=s6EaoPMANQM
But as an employer you do need to select a pension scheme for Auto Enrolment.
Then you need to consider how you will comply with your responsibilities and keep records for:
- Contributions
- Opting Out
- Opting In
- Earnings
- Employee Records
- Communication with Employees
Take a look at this video for middleware to get an understanding of how you could manage your compliance requirements
So here are your 3 basic ways to comply:
- Small Employers – you may decide to do it yourself using information on the Pension Regulators website and provider of your choice
- Pension Provider Portals – schemes like the Peoples Pension will have portals and tools to help you manage your auto enrolment pensions but it won’t cater for other benefits and other schemes
- Middleware – like the video above, this gives lots of functionality and will allow you incorporate other schemes and benefits but its not free
You might also find this blog worth reading ‘10 things you need to know about Pension Auto Enrolment’
steve@bicknells.net
Are you a Business Owner with No Private Pension?
You’re not alone its estimated that 1.3 million business owner have no private pension that’s approx one in two UK Business Owners (according to Prudential).
https://www.moneyadviceservice.org.uk/en/articles/uk-business-owners-lack-pension-savings
Nearly one in three business owners (or 792,000 people) say they will be entirely reliant on the State Pension when they come to retire, compared with twice as many people across all employment types retiring this year in the UK.
Other self-employed workers will supplement their retirement incomes with money from a mix of alternative sources:
- half will draw on other savings and investments
- one in four will use equity from their properties or plan to use their partners’ pensions, and
- one in five plan to use funds from the eventual sale of their businesses.
Most of us know we should be saving more for retirement and the government knows that we need to save more too. That’s why they give pensions tax breaks and employers are being forced to auto enrole staff into pension schemes and make payments.
But how many of us stand a chance of saving £400k into our pensions? it’s a huge amount of money and yet it only buys a modest pension. Work out your strategy now before its too late.
http://stevejbicknell.com/2012/07/29/what-is-the-minimum-pension-fund-you-will-need-to-retire-400k/
steve@bicknells.net
10 important things to know about auto enrolment pensions
Here are 10 things that you need to know:
- A Worker may include Agency workers and Self Employed workers depending on the their contracts
- One Person companies are not subject to Auto Enrolment however, if the company takes on a second worker and the director and new employee have contracts of employment then both could become workers under auto enrolment.
- Eligible Job holders are aged between 22 and state pension age and earn over £9,440 and are automatically enrolled however Non Eligible Job holders could opt to join
- Employer contributions will be 1% from October 2012 till 2017 (2% total contributions), then 2% till 2018 (5% total contributions), then go to 3% (8% total contributions)
- The employer must register their scheme www.tpr.gov.uk/registration
- The scheme is being introduced over a 5 year period starting in 2012, to find out when it applies to your business click on this link http://www.thepensionsregulator.gov.uk/employers/staging-date-timeline.aspx
- Employees can opt out but new Employment Rights will prevent employers from offering inducements to opt out and prohibit employers from anti pension recruitment policies and unfair dismissal relating to pension enrolment
- If the employee opts out the employer must automatically re-enrol them every 3 years
- The Pensions Regulator will have powers to issue compliance notices and fixed and escalating penalties increasing on a daily basis. Employees who blow the whistle on their employer will be protected under the Public Interest Disclosure Act 1998
- The following types of scheme will qualify
- Defined Benefit Schemes
- Defined Contribution Schemes
- Hybrid Schemes
- Contract Based DC Schemes
- Stakeholder Pension Schemes
steve@bicknells.net
Business Accountant 