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Spring Budget 2024: A round-up of changes.

Spring Budget 2024: A round-up of changes. 1920 1453 Growth Partners

Against a backdrop of gloomy consumer confidence, continued cost-of-living challenges, and what is scheduled to be the last budget before the next general election, Chancellor Jeremy Hunt presented his Spring Budget to the Parliament with an array of measures aimed at “not higher GDP, but higher GDP per head”, suggesting a focus on productivity in the UK economy.

Here is a roundup of the key measures announced by the Chancellor.

Class 1 Employee National Insurance Contributions

The main rate for Class 1 Employee National Insurance Contributions (NICs) will be reduced by a further two percentage points to 8% from 6 April 2024 for earnings between the primary threshold and the upper earning limit.

This will give the average employee a boost to their take-home pay by £450 a year (or £900 a year when you consider the NIC cut announced in the last autumn budget).

  • Employee Class 1 NIC – 8% (6 April 2024)
  • Primary threshold – £12,571
  • Upper earning limit – £50,270

Child benefits

The child benefit threshold – the level of income at which a parent starts to lose child benefit entitlements – will rise from £50,000 to £60,000, allowing more families to claim more child benefit from this April onwards.

The increase in the child benefit threshold will be accompanied by an increase of the taper from £60,000 to £80,000. This means the child benefit tax charge will be equal to the full amount of the child benefit received if an individual’s ‘adjusted net income’ is £80k or more. 

Capital gains tax

To encourage more movement in residential property sales, the Chancellor announced a cut to the higher rate capital gains tax from 28% to 24%.  

Pensions

In the Autumn Statement speech, the Chancellor promoted the concept of a ‘legal right’ for people to select a pension provider of their choice. The concept would allow employees to have a single pension pot which they can take with them when they change jobs, as opposed to starting a new pension pot with a new pension provider selected by their employer, each time they change jobs.

In the Spring Budget paperwork however, the Government now says that it is simply committed to ‘exploring’ the idea.  It also says that it will only do this if it can ‘ensure’ it will produce better outcomes.

Disappointingly however, there was no mention of any auto-enrolment enhancements from the Chancellor’s Spring Budget statement.

Fuel duty freeze

Despite the push from the Treasury officials to raise fuel duty by at least 2p, the Chancellor announced he will maintain the freeze on the fuel duty for a further 12 months, until March 2025.

Alcohol duty freeze

The Chancellor also has confirmed the extension to the alcohol duty freeze until February 2025, a move which the Chancellor said will benefit 38,000 pubs across the UK.

‘British ISA’

To promote investment into UK businesses, the Chancellor announced a new ‘British ISA’ which will provide another £5,000 of annual tax-free investment in UK equities.

Mr Hunt claims the move will “ensure that British savers can benefit from the growth of the most promising UK businesses” while supporting those firms financially to expand.

Our thoughts

The Budget was largely aimed at families with NI cuts, changes to the child benefit threshold and high-income child benefit charge, and a drop in the higher rate capital gains tax for residential property.

The pickings were slimmer for businesses but there were still some announcements that will be of interest including alcohol duty freeze and promoting investments into UK businesses by way of the proposed new ‘British ISA’ and requiring pension schemes to disclose their UK equity allocation, with the long-term intention of directing pension funds to have a more UK bias in terms of fund allocations.

Ending on a more optimistic note, Mr Hunt stated that inflation in the UK will finally drop below the 2% target “in just a few months’ time” according to the latest forecast by the Office for Budget Responsibility! This would in turn allow the government to lower interest rates a lot sooner than originally envisaged.

How we can help

We’re passionate about helping businesses continue to look out for their employees while keeping costs down. If you and your business find some of the changes announced in the Budget Statement challenging or have any questions about how the changes announced impact your business, speak to our experts to discuss how we can support you.

You can read our summary of the last Budget here or read more information about unburdening your business from payroll and pension compliance here or read more about supporting your employees’ financial wellbeing, emotional wellbeing and physical wellbeing.

Amrik Birdi, Head of Operations at Growth Partners

blankAmrik has a wealth of knowledge in pensions having joined Growth Partners from KPMG where he was responsible for advising companies and trustees on independent DC provider procurement exercises, DC investment strategy review, DC pensions strategy review, automatic enrolment compliance, and meeting ongoing governance requirements. Amrik spent three years before this as a Pensions Guidance Specialist at Pensions Wise helping members understand their pension and retirement options, empowering them to take control of their retirement journey. With a Diploma in Regulated Financial Planning and Certificate in DC Governance, combined with a Degree in Economics, Amrik is a fully qualified pensions consultant and able to offer strategic support to our clients on their options for workplace pension schemes and auto-enrolment.

Your money checklist for the new financial year
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Your money checklist for the new financial year

Your money checklist for the new financial year 1920 1280 Growth Partners

Do you want to give your finances a fresh start in the new financial year? Is getting on top of money matters one of your new year’s resolutions?

Now is the perfect time to give your personal and business finances a fresh start ahead of the new financial year. Tick off this checklist to get your tax and pension plans in order and prepare for the end of the tax year on 5 April 2024.

4 things to do before 5 April to give your personal finances a fresh start: 

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1. Are you on track to receive your full State Pension? 

The number of years you pay National Insurance (NI) for can affect whether you qualify for the State Pension and how much you’ll get. So now could be a good opportunity to make up for any lost time.

The deadline for paying any voluntary National Insurance (NI) contributions to make up for any lost time is 5 April each year. You can usually pay voluntary contributions for the past six years. Employee National Insurance Contributions (NICs) have reduced by two percentage points to 10% from 6 January 2024 for earnings between the primary threshold and the upper earning limit, giving employees a small boost to their take-home pay.

You can check your NI record or find out more about voluntary NI payments on the government’s website.

Can you top up your pension?
Pension plans are a tax-efficient way to save for your future. It normally costs £80 for a basic rate taxpayer to save £100 into their pension plan, thanks to pension tax relief. So, if your budget allows, why not top-up your pension before the tax year ends on 5 April.

Remember, you, your employer and any third party can pay in across all your pension plans £60,000 or 100% of your salary (whichever is lower) in any given tax year – this is called Annual Allowance.

2. Make the most of your capital gains tax exemption… before it reduces

Capital gains tax (CGT) is the tax you pay on the profit when you sell something that’s increased in value. The annual exemption on capital gains tax is reducing significantly in the new tax year – from £6,000 down to £3,000. So, if you have something worth selling, you may want to consider doing it before the end of the tax year.

3. Maximise your ISA allowances.

Your ISA (Individual Savings Account) allowance is £20,000 for the tax year. This means you can save up to £20,000 in a Cash or Stocks & Shares ISA, or a combination of both, and not pay any tax when you take your money out.

It’s a tax-efficient way to save, so make the most of this allowance if you can.

4. Get gifting!

You can give away a total of £3,000 worth of gifts each tax year without them being added to the value of your estate. This is known as your inheritance tax-free gift allowance. This can be carried over to the next tax year but if you don’t use it by the end of that year it’ll be lost.

So, if you’re planning to make a gift to someone, or have an unused allowance from last year, it might be a good idea to do this before the the tax year ends.

3 things to do before 5 April to give your business finances a fresh start: 

Pension salary sacrifice advice

1. Assess if pension salary sacrifice is right for your business

Implementing pension salary sacrifice can enable you to lower employer NICs – which you can either pass on to your employees in the form of additional pension contributions, reinvest back into the business or save it to strengthen net profits. Implementing salary sacrifice can also help attract and retain the best talent as part of a strong benefits package.

2. Look around at your options for payroll processing

Traditional outsourced payroll providers like to take on new clients for the start of the new financial year – it’s less work for all. It’s a good time to check your existing contracts or arrangements and see if you’re still getting value for money – what extras are included that you don’t get elsewhere?

If you process payroll in-house, is this limiting the growth of the business by burdening great staff with tasks that can be outsourced.

3. Double check for pension auto-enrolment inaccuracies

It’s a good time to check in with your HR and/or payroll team to see how confident they feel about your business meeting its auto-enrolment ‘employer duties’. It is commonplace for employers to overlook and/or not fully understand some of the initial and ongoing ‘employer duties’ under auto-enrolment leading to The Pensions Regulator issuing 20,382 compliance notices during the period January-June 2022 alone, for example.

Common errors we see include, but not limited to:

  • Issuing letters to those who are classed as ‘eligible’ workers (and auto-enrolled into the pension scheme) but not issuing communication to those postponed and/or classed as ‘not eligible’ about their right to join/opt-in to the pension scheme.
  • Issuing communication past the Regulator’s deadline of six weeks from when the duties applied.
  • Re-enrolling those who opted-out of the pension scheme every three years as part of their auto re-enrolment duties.
  • No record keeping.
  • Not being aware of the components of pay to be included in ‘pensionable pay’ or excluding certain components of pay, such as bonuses, commissions, overtime etc, but not amending the employer minimum contributions as prescribed by the legislation

How we can help

We’re passionate about making employers’ and employees’ lives easier, happier, and healthier so businesses can grow.  Our experts in pay and pensions can offer information and guidance on how to improve the financial wellbeing of your business and that of your employees.

For more information about unburdening your business from payroll and pension compliance visit our SMART Employment page or read more about supporting your employees’ financial wellbeing, emotional wellbeing and physical wellbeing here or get in touch

Amrik Birdi, Head of Operations at Growth Partners

blankAmrik has a wealth of knowledge in pensions having joined Growth Partners from KPMG where he was responsible for advising companies and trustees on independent DC provider procurement exercises, DC investment strategy review, DC pensions strategy review, automatic enrolment compliance, and meeting ongoing governance requirements. Amrik spent three years before this as a Pensions Guidance Specialist at Pensions Wise helping members understand their pension and retirement options, empowering them to take control of their retirement journey. With a Diploma in Regulated Financial Planning and Certificate in DC Governance, combined with a Degree in Economics, Amrik is a fully qualified pensions consultant and able to offer strategic support to our clients on their options for workplace pension schemes and auto-enrolment.

Employee engagement starts with payroll
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Why employee engagement starts with the payroll team

Why employee engagement starts with the payroll team 1280 720 Growth Partners

National Payroll Week is an occasion designed to mark the hard work payroll professionals do to keep Britain paid. And they really do.

In a year that started with CPIH inflation rates of 26.7% caused by housing fuel costs, payroll is becoming the most important department in every business and the payroll team is potentially carrying the weight of success on its shoulders.

35% of UK employees would find another job if they were paid incorrectly even once and 51% would lose trust in their employer and resent them. Based on this, you could be seeing more than a third of your staff walking out the door if the payroll department mess up just once – this is huge. Overlooking payroll processors as a business-critical role opens companies up to risks that aren’t just limited to financial in nature.

The first risk to consider is morale.

If an employee is paid incorrectly, they lose trust and confidence in the management and they might be vocal about it too. You can imagine it “we’re not priority” “we’re an afterthought” “I bet the boss still got paid”.  Of course, the thoughts will depend on how big an error is, how frequent errors are and who is on the receiving end, but they can quickly create a culture where people question the management’s integrity – if they don’t care enough to get my pay right, they certainly don’t care about what’s going on at home. Low morale can lead to a reputational issue internally but with the growth of review sites such as Glassdoor, internal reputational issues can quickly become external issues not only impacting retention but talent acquisition too.

Do it once you might be ok, do it more than once you’re in trouble.

At this point any change (good or bad) can raise suspicion. If you pay people a day early but don’t communicate why, they’ll think you don’t know what you’re doing. Pay people a day late, they’ll think there’s a cashflow issue. A lack of trust here will make employees question their faith in the leadership team to make decisions in other areas of the business and ultimately their confidence in the business and its products or services. And no matter what the cause is, people won’t 100% believe your reasons.

I believe people leave jobs for more money.

Yes, more and more people are considering culture and employee benefits over salary but ultimately in a time where less and less people have savings for a rainy day because it’s been raining for two years, pay matters and is usually the deciding factor. So, a reputation for paying people late or incorrectly isn’t a look you need to be going for.

Employee benefits are not contractual in nature and can be removed from an employee’s contract without consultation. Being paid correctly on a certain date is. In essence, if you mess up payroll, you mess with people’s contracts of employment. Employee benefits don’t mean anything if you have a bad culture anyway. So, for those companies that attract people based on a great rate of pay if you don’t deliver it on-time and correctly – you better have an out of this world company culture to make them stay. Of course, chances are you won’t if you have payroll issues.

Payroll is complicated.

The importance of paying people correctly isn’t new – but when you consider that a third of UK workers are now living payday to payday the potential impact of payroll errors and mistakes has higher stakes.  But payroll is complicated. You only have to look back to last year when bosses of high street giant Next apologised to staff for underpaying some of them by up to £200 a month due to a payroll error and just a few months ago WH Smith, Marks & Spencer and Argos were among a list of companies facing financial penalties for payroll breaches.  If the big boys can make mistakes, it’s a stark reminder to check in with your payroll team or provider to assess the potential risk to your business. If new legislation is announced, how is it handled? Do they have the reliable updated software to comply automatically with significant changes?

Ultimately if you want an engaged workforce, check in with your payroll team or provider first. If you want to invest in employee benefits to improve company culture, check in with your payroll team or provider beforehand. If you genuinely care about your employees and believe they are the key to business success, you guessed it check in with your payroll team or provider.

Happy national payroll week!

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Scott Read, CEO of Employee Services at Growth Partners

Scott Read Growth Partners discusses the link between employee engagement and retention

Scott Read is a results-driven business leader with a proven track record in helping employers strategise key business growth through employee engagement. To find out more about the link between pay, pensions and employee benefits chat to us or book a demo with one of our experts.

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Autumn Budget 2023: A round-up of pay and pension changes

Autumn Budget 2023: A round-up of pay and pension changes 1920 1413 Growth Partners

Following the Chancellor’s Autumn Budget Statement 2023, here is a summary of the key measures and announcements affecting payroll and pension for businesses to navigate.

What to change on your payroll system

Class 1 Employee National Insurance Contributions
The main rate for Class 1 Employee National Insurance Contributions (NICs) will be reduced by two percentage points to 10% from 6 January 2024 for earnings between the primary threshold and the upper earning limit, giving employees a small boost to their take-home pay.

  • Employee Class 1 NIC – 10% (6 January 2024)
  • Primary threshold – £12,571
  • Upper earning limit – £50,270

The National Living Wage
From 1 April 2024, the National Living Wage (lowest wage legally payable to workers) will:

  • apply to all employees aged 21 and over (currently 23 and over), and
  • increase from £10.42 to £11.44/hour, or a 9.8% rise.

To remain compliant with new changes to the National Living wage, businesses must ensure employees aged 21 and over receive the minimum pay per hour they are entitled to.

National Minimum Wage
It’s important to note, the National Living Wage and the National Minimum Wage, while often confused, are distinct. The National Minimum Wage is the minimum legal wage for younger workers and apprentices. The National Minimum Wage also been updated:

  • Employees aged 18-20, from £7.49 to £8.60.
  • Employees aged under 18, from £5.28 to £6.40.
  • Apprentices under 19, or over 19, but in their first year, also from £5.28 to £6.40.

These changes will also take affect from 1 April 2024.

What will remain the same on your payroll system?

The Chancellor announced to keep the certain rates and thresholds the same for the 2024-2025 tax year, including:

  • Employer’s Class 1 National Insurance rate.
  • Employer’s Class 1A National Insurance rate (on benefits and termination payments over £30k).
  • Employer’s Class 1B National Insurance rate (on benefits reported via a PAYE Settlement Agreement (PSA)).
  • National Insurance thresholds, including the Lower Earnings Limit (the point at which an employee becomes eligible for statutory payments and is used for state pension eligibility).
  • Personal tax allowance.
  • Rates of income tax within the rest of the UK.
  • Employment allowance.
  • Company car benefit rates.

What to watch out for

Auto-enrolment pensions
Under the current automatic enrolment system, employers are required to offer all ‘eligible’ staff a pension plan and enrol them into it – but it’s the employers that choose the pension scheme.

That could potentially change – the Chancellor announced to launch a consultation on the concept of a ‘pension pot for life’ which will aim to gather industry thoughts/comments on whether it makes sense to introduce new rules making it the employee’s decision where their workplace pension savings go. This would let the employee pick one pension and keep it from job to job over their whole career while still benefiting from employer contributions.

While the concept will benefit employees in some respects, it would be very complicated for businesses. Instead of only needing to keep track of one pension scheme, employers would be faced with managing a different scheme per employee.

Encouraging more people back into work
The Chancellor confirmed plans to phase out certain benefits and step-up efforts to monitor those receiving welfare. This is all part of the ‘Back to Work’ plan, which aims to encourage 1.1 million people back into work.

The Chancellor also confirmed measures to allow working parents to claim free childcare will go ahead. This will apply to children aged 1-2 years old, and parents will be able to claim up to 30 hours a week. For more information see Budget 2023: Everything you need to know about childcare support – The Education Hub 

Our thoughts on the Autumn Budget

The announcement to lower employee NICs, increase national living and minimum wage, changes to the childcare support and the proposed concept of ‘pension pot for life’ provides some good news for employees, especially for those on low incomes.

On the other hand, with no changes announced to the employer NICs, and higher national minimum and living wage there will be continued added pressure on businesses to meet the new basic pay in the current economic and business climate. The proposed changes to pensions will only add to those costs and add more pressure in the future.

How we can help

We’re passionate about helping businesses continue to look out for their employees while keeping costs down. If you and your business find some of the changes announced in the Budget Statement challenging, be it the added financial strain to your business or the practical implementation of the proposed changes, speak to us for an informal chat.

For more information about unburdening your business from payroll and pension compliance visit our SMART Employment page and read more about supporting your employees’ financial wellbeing, emotional wellbeing and physical wellbeing.

Amrik Birdi, Head of Operations at Growth Partners

blankAmrik has a wealth of knowledge in pensions having joined Growth Partners from KPMG where he was responsible for advising companies and trustees on independent DC provider procurement exercises, DC investment strategy review, DC pensions strategy review, automatic enrolment compliance, and meeting ongoing governance requirements. Amrik spent three years before this as a Pensions Guidance Specialist at Pensions Wise helping members understand their pension and retirement options, empowering them to take control of their retirement journey. With a Diploma in Regulated Financial Planning and Certificate in DC Governance, combined with a Degree in Economics, Amrik is a fully qualified pensions consultant and able to offer strategic support to our clients on their options for workplace pension schemes and auto-enrolment.

Financial wellbeing support
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How to support your employees’ financial wellbeing [Free downloadable guides]

How to support your employees’ financial wellbeing [Free downloadable guides] 1920 1280 Growth Partners

61% of UK adults currently saying they’re concerned about paying general household bills, and more than a third feeling anxious about their financial situation, it’s the perfect time to check on your employees’ financial wellbeing.

Anxiety is one of the most common mental health problems in the UK – the Mental Health Foundation reports a quarter of adults have felt so anxious it stopped them from doing the things they want to do some or all of the time. In April, demand for our Employee Assistance Programme increased by 400% on the month previous, with our clients’ employees using the confidential counselling services for personal (72%) and work-related (28%) support.

It’s clear, as employers we must help increase awareness and understanding of these concerns and inform ourselves on how and why we can help support employees’ financial wellbeing and in turn their emotional wellbeing.

Financial wellbeing in the workplace 

There is a clear link between financial wellbeing (or financial wellness as its sometimes referred to) and emotional wellbeing and a very clear link to the impact they can have on productivity in the workplace.

In the year to March 2023, the price of food and drink rose at its fastest rate in over 45 years and housing, water, electricity, gas and other fuels rose by 26.1% (Money Statistics). All of which impact your employees’ take-home pay and ultimately their wellbeing – how happy and healthy they feel.

Looking out for your employees’ financial wellbeing is incredibly important, and the benefits for them and you, are more tangible than you may think. Financial worries negatively impact employee productivity and absence rates, causing the ‘presenteeism’ effect. If you haven’t already, seek support to enhance your financial wellbeing services and get advice from experts.

Ensuring the financial wellbeing of employees is an important aspect of creating a positive and productive work environment. Here are some things to consider…

4 things to consider when it comes to financial wellbeing:

  1. Open communication:

    Encouraging open communication about financial issues can help employees feel more comfortable discussing their financial concerns and seeking support when needed. Employee assistance programs (EAPs) can provide confidential support and counselling for a variety of issues, including financial stress. Do you have the systems in place to minimise absence days and ensure workers aren’t worrying about their finances while at work?

  2. Flexible working arrangements

    Offering flexible working arrangements, such as hybrid working, flexible hours, and job sharing, can help employees save on transportation and childcare costs and help reduce the pressure they may be under from increasing costs.

  3. Fair and competitive compensation

    Employees need to be paid fairly and competitively for their work. This includes not just their base salary, but also any benefits such as healthcare, retirement plans, bonuses, and other ‘perks’ Do you have an employee discounts schemein place to help your employees’ wages go a bit further? Discount schemes can provide financial support by increasing your employees’ disposable income. Can you do anything to bring salary reviews forward to help people that little bit more, sooner? Have you reached out to local businesses your employees use to see how you can support each other e.g., negotiate reduced parking fees with a local car park or a discount at a local food outlet – can you reciprocate?

  4. Financial education and resources

    Providing financial education and guidance in the workplace can help employees understand personal finance, budgeting, investing, retirement planning and other important financial topics. This can include workshops, seminars, and online resources. Where do your employees go for financial guidance?  You can also signpost them to reputable sources such as Money Helper’s budget planner

Useful resources to support your employees’ financial wellbeing

  1. Discuss Budget Builders with your employees

    This one is provided by The Money Charity and it’s free and easy-to-use. It can be used to create an initial budget and keep track of day-to-day spending.  It does all the calculations for you and it can be used as a way of organising money across different bank accounts.

  2. Download our free New Ways of Saving Guide to share with your staff.

    Our savings guide gives you a simple guide to share with your employees – link to it from your internal communication systems, print some copies for the break room or ask line managers to share it with their team. However you use it, it’s full of ideas and tips designed to help your employees save money.

  3. Read: How to Support your employees to navigate through the cost-of-living crisis

    Recent research from Speakers’ Corner suggests business leaders are misinformed about the causes of stress among their employees, believing they directly align with their own. Heavy workload is the number one pressure for business leaders, whereas managing financially throughout the cost-of-living crisis came out top among employees. Knowledge is power and keeping abreast of ways to support your employees to navigate these uncertain times will help inform your financial wellbeing strategy.

  4. Help employees secure their future, with our free Employees FAQ Guide to Pension

    When it comes to financial wellbeing, information is key. By providing your employees with reliable, helpful information you’re empowering them to make informed decisions to benefit their future. This free guide answers some of the most commonly asked pension questions such as What makes pensions more rewarding than other kinds of savings? Would I benefit from combining my pensions into one? What are my options for taking my money?

  5. Download your free guide to creating a wellbeing and engagement strategy to attract and retain staff

    If keeping great staff is on your radar, our retention strategy guide will help. The guide focuses on how you can add a range of employee benefits and wellbeing services in a cost-effective way, without necessarily adding additional costs to your business.

What next?

If you’re concerned about your employees’ financial wellbeing and the impact on your business growth, chat with our experts for advice. We know the combination of reduced costs, unburdening your management team, and prioritising the happiness and health of your employees is the key to business growth. And we can provide an all-in-one solution to help.

 

Book a free demo of our all-in-one solution for payroll, pension and employee engagement services or contact us

National Payroll Week
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National Payroll Week – 3 things business owners should do

National Payroll Week – 3 things business owners should do 1200 628 Growth Partners

National Payroll Week takes place 4 – 8 September this year. It’s a time when payroll professionals are celebrated and we talk about the importance of payroll – processing payroll, managing payroll and understanding payroll, and everything that’s involved in keeping the UK paid.

Whether you process payroll in-house or outsource to a payroll provider, there’s never a better time to do these three key things.

1. Double-check your payslips are sent securely

Around 60% of organisations now provide payslips via an online self-service facility compared to just 12% back in 2008. However you deliver payslips to your employees, it is essential to ensure they’re secure. This means, if you’re still emailing payslips to your employees, it may be a good time to look at your options.

Although according to GDPR emailing documents to employees is not banned, as an employer you do have a responsibility to minimise the opportunities for personal data to be seen by the wrong people. Email was never meant to be secure and if your company emails are subject to a data breach you will be held responsible. Similarly, if the email is intercepted you cannot guarantee confidentiality which is against GDPR guidelines. Of course, email can be encrypted, and password protected but it is worth considering how user-friendly this is, whether employees have access to their emails on personal devices when they may need their pay documents and how this fits with your image and values as a company. Read more about digital payslips on the Chartered Institute of Payroll Professionals website.

 

2. Encourage your employees to check their payslips

Do your employees understand their payslips and know who to contact if they have a question? In a recent survey, only 62% of people admitted to understanding everything on their payslip. It is a legal requirement to provide all employees with a payslip, and it must contain at least these five things:

  1. Gross pay
  2. Net pay
  3. Any variable deductions
  4. Any fixed deductions
  5. A breakdown of how wages will be paid if more than one method is used

Ask your employees to grab a coffee and check their payslip. Let them know who they can contact in payroll for a chat about their payslip and anything they don’t understand. If your payroll provider doesn’t offer this service you can use the Understanding Your Payslip resources from The Chartered Institute of Payroll Professionals.

 

3. Do some calculations – check your contract with your current payroll provider, or the costs of processing payroll in-house

Processing payroll is a legal requirement but is also an administrative burden, which is probably why 61% of businesses in the UK choose to outsource their payroll. Outsourcing your payroll can be a sensible decision but it shouldn’t cost the earth. Use this week to take time to shop around or at least renegotiate to check you’re getting the best deal. Consider what other services you could get from your payroll provider. Imagine the benefits of paying one fee for multiple services as opposed to juggling multiple suppliers and invoices.

The responsibility associated with payroll processing makes it a sound business decision to hand it over to an expert but as a business owner you should be very careful who you hand it to.  Here are 6 things to consider when researching outsourced payroll providers

Take the time during National Payroll Week to step back and look at your payroll within your organisation to make sure you’re providing the best service for your employees and getting the best deal from your payroll provider.

 

Payroll business solutions

Payroll compliance can be a burden when you’re trying to grow a business. By using payroll specialists to process your payroll and also take on the HMRC and Pensions Regulator compliance, you have more time to focus on business growth.

You can read more about our payroll services here. And if you’re interested in outsourcing your payroll to experts with electronic payslips, you can use our payroll cost-saving calculator to see how much you can save, or even earn by outsourcing your payroll to Growth Partners or book a demo here.

How payroll outsourcing works in 2023
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An introduction to payroll outsourcing – how payroll outsourcing works in 2023

An introduction to payroll outsourcing – how payroll outsourcing works in 2023 1280 720 Growth Partners

The UK payroll system plays a crucial role in the smooth running of a business – ensuring employees are paid accurately and on time while complying with legal and regulatory requirements.

35% of UK employees would find another job if they were paid incorrectly even once, and 51% would lose trust in their employer and resent them (Sage, 2023). Statistics like this show the pressure on payroll managers for data accuracy and on-time processing.

As a business grows and evolves, the demands on its payroll department increase and often present a need to assess the advantages and opportunities available within the payroll landscape.

The growth of a business means that its’ leaders have an important decision to make. Do they invest in additional key staff such as payroll clerks, finance managers, and HR support, or do they outsource?

Additions to headcount are expensive, but the perception is they help maintain a level of control within the business, which isn’t strictly true. Enabling key outsourced partnerships at an early stage of business growth can be pivotal to ensuring the chosen partners grow with them.

Business owners are always thinking about growth, productivity, and profitability. The notion that maintaining control over these services gives greater certainty can be problematic and is often contradictory to reality.

In this comprehensive guide to outsourced payroll, we explore:

  • the range of payroll outsourcing options
  • potential benefits for your business, and
  • what things to look out for.

We’ll also share insights into maximising its potential by leveraging specialised outsourced payroll providers.

What are the options for payroll outsourcing? 

It’s important to note the scope of services provided by payroll service providers can vary depending on three main things; the type of provider you choose, the specific provider and the package or plan you opt for. It’s advisable to understand what each type of provider offers before selecting one that aligns with your business requirements.

The four types of payroll providers are:

  1. Accountant
  2. Payroll bureau/specialist payroll provider
  3. Professional Employer Organisation (PEO)
  4. Umbrella

Four types of payroll provider

1. Outsourcing payroll to an accountant

The key is to find an accountant that specialises in payroll. They can ensure your payroll is accurate and compliant with all applicable laws and regulations. You are ultimately responsible for any inaccuracies, but they can advise on any change in legislation and deadlines.
When considering outsourcing payroll to an accountancy firm, it’s crucial to assess their proficiency in payroll processing since not all accountants specialise in this field. It’s also essential to review their client track record, and how familiar they are with industry regulations. You need to ensure they cater to the specific needs and scale of your business. Consider the costs involved, the level of service, and the support they can offer.

2. Outsourcing payroll to a payroll bureau/specialist payroll provider

Payroll bureaus specialise in payroll services. They have extensive expertise in payroll processing, tax calculations, compliance, and other payroll-related tasks. By outsourcing payroll to them, businesses benefit from their specialised knowledge, accuracy, efficiency, and time savings. Payroll bureaus may offer services tailored to specific business needs, handle complex payroll processes, and help ensure compliance with regulations. They can often provide advanced payroll software and systems. They offer scalability and data security and allow businesses to focus on their core operations knowing payroll management is handled by experienced professionals.
When considering outsourcing to a specialised payroll bureau, verify the bureau’s reputation, experience, and service offerings to ensure they align with your payroll needs. Confirm their ability to customise services to your unique requirements and enquire about data protection measures. You can compare pricing structures and take into consideration the level of customer support you may need versus what they offer.

 

3. Outsourcing payroll to an umbrella company

When outsourcing payroll to an umbrella company, contractors or freelancers become employees of the umbrella company. The umbrella company then handles administrative and payroll-related tasks. Contractors submit timesheets, and the umbrella company calculates payments, deducts taxes, and ensures compliance with regulations.
Using an umbrella company can be convenient for contractors who want to focus on their work and prefer to have the administrative responsibilities taken care of by a third party. Using an umbrella company means contractors will become employees for payroll purposes. They may have slightly reduced flexibility and control compared to operating as a self-employed individual. Businesses using contractors, no longer need to worry about IR35 with an umbrella company.
When considering outsourcing payroll to an umbrella company, you should assess the fees and services, and understand any impact of being employed by an umbrella company. Contractors should also consider consulting with professional advisors to ensure the umbrella company services align with their specific needs and circumstances, e.g. IR35.

 

4. Outsourcing payroll to a Professional Employer Organisation (PEO)

PEOs take on various HR and payroll responsibilities on behalf of a business. One of the key functions handled by a PEO is payroll processing.
With a PEO, they become the employer of record for your employees, while you retain control over their day-to-day work and operations. This includes the PEO taking on responsibility for compliance with all HMRC and Pension Regulator requirements, taking the liability away from you. If you use contractors, you won’t need to worry about IR35 with a PEO. PEOs take on payroll tasks such as calculating wages, deductions, and taxes and ensuring accurate and on-time payment of wages. PEOs also manage tax and compliance matters. This expertise and focus on compliance can provide peace of mind and help mitigate potential compliance risks associated with payroll management.
PEOs also provide businesses with HR services to help them grow. The aim is for the business to be able to focus on growth and rely on the expertise and resources of the PEO to handle all the complexities of payroll, pensions, and HR administration.
When looking at outsourcing to a PEO, factors to consider are reputation, financial stability, compliance track record, experience, level of customer support, data security measures, and understanding of your specific business needs. You should also assess the range of HR services they provide for both employers and employees as part of the package.

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What are the benefits of outsourcing payroll over keeping it in-house? 

Enhanced data security and confidentiality
Managing payroll data comes with data security responsibilities, such as maintaining up-to-date security measures, regular backups, and staying informed about evolving data privacy regulations. It can require dedicated resources and expertise, depending on the size and complexity of your payroll operation.

Outsourcing to a provider with robust data security measures to protect sensitive employee information will relieve you of this burden. They use secure systems for data storage, transmission, and backup, ensuring confidentiality and compliance with data protection regulations.

Utilise personnel effectively
Outsourcing payroll not only frees up staff members who were previously responsible for payroll tasks but contributes to increased overall productivity and efficiency within the organisation. Where you have capable and flexible staff, you can reutilise them in the business towards core business activities, strategic initiatives, or projects that contribute to company growth. Staff members are empowered to use their skills and expertise, leading to improved performance.

In many cases, businesses do not have a dedicated payroll team, and payroll becomes an additional task for someone to handle. This task is time-consuming and can detract from other important responsibilities. By outsourcing payroll, businesses alleviate this burden. It also enables employees to engage in tasks they enjoy, or ‘signed up for’ ultimately enhancing job satisfaction.

Expertise and knowledge: staying up to date with complex legislation
In most cases, it becomes the outsourced providers’ responsibility to stay updated with changing tax laws, labour regulations, and reporting requirements. They ensure your business stays compliant with these laws, reducing the risk of penalties or legal issues. PEOs and umbrellas take on all liabilities, so any compliance issues sit with them rather than you for complete peace of mind. When outsourcing to a payroll bureau or accountancy firm, check the service level agreement to understand their approach to liabilities.

Scalability and flexibility: adapting to business growth and seasonal fluctuations
Outsourcing payroll offers scalability to accommodate your business growth. It can be great if you have seasonal fluctuations in employee numbers. Whether you need to onboard new employees quickly or downsize your workforce, payroll providers can adapt to your changing needs. This flexibility helps maintain a smooth workflow without the need for significant adjustments to your processes or your headcount. Some providers may charge for this service, so this is something to check as part of your decision-making process.

Streamlined processes and efficient workflow management
By leveraging the expertise, automation, and technology offered by outsourced payroll providers, outsourcing payroll can streamline processes and create efficient workflow management. Benefits include simplifying payroll administration, automating tasks, minimising errors, providing accurate reporting, integrating with timekeeping systems and offering employee self-serve portals. This ultimately leads to increased efficiency.

Technology and automation: unlocking innovative solutions
Many outsourced payroll providers offer online portals or software that allow employees to access their payroll information, e.g. pay slips and P11Ds. This self-service feature reduces administrative work for businesses and empowers employees to manage their payroll-related information. It’s also helpful for employees to have this information in one place should they ever need it for proof of earnings, for example. You may also benefit from outsourcing payroll if handling employee queries around pay, and pensions is a concern for you.

 

Key Considerations for Choosing a Payroll Provider 

We’ve discussed the range of options available when it comes to outsourcing payroll and we’ve highlighted some of the key benefits. If you’re considering outsourcing your payroll, here are four key things to consider before making the transition:

Compliance and data security
As discussed, payroll involves handling sensitive employee information, so data security is paramount. Enquire about the payroll provider’s data security measures, such as encryption, access controls, backups, and compliance with data protection regulations like GDPR. Understand their protocols for data handling, confidentiality, and disaster recovery.

Service level agreements (SLAs) and support
An SLA outlines the level of service and performance commitments between you and the payroll provider. It defines key metrics, such as payroll processing accuracy, response times for enquiries, and issue resolution timelines. Carefully review the SLA to ensure that it aligns with your performance expectations and that the provider is accountable for meeting agreed-upon service levels.

Payroll issues can arise at any time, so it’s essential to understand the support availability offered by the provider. Determine their support hours and channels. Ideally, the provider should offer prompt and reliable support during your business hours to address any payroll-related concerns or questions that may arise. Evaluate their process for resolving issues, their escalation procedures, and the expertise of their support team. Consider how they handle employee queries, the availability of support channels, and the quality of their customer service in addressing employee concerns. Look for providers with multiple communication channels such as live chat and UK-based call centres. Self-service options for employers and employees can also enhance query handling.

Pricing models and cost-effectiveness
Evaluate the different pricing models offered by payroll providers, such as flat monthly fees or per-employee charges, and choose the one that aligns with your budget and business needs. Ensure the pricing structure is transparent, without any hidden costs or unexpected fees. Additionally, compare the cost of outsourcing payroll with the expenses associated with keeping it in-house, such as salaries, payroll software, employee training, tax regulation updates, and the time and effort required for payroll processing.

Assess the overall cost-effectiveness of outsourcing payroll by weighing the financial investment against the benefits gained, such as reduced administrative burden, improved accuracy, compliance expertise, and access to advanced payroll technology. Ultimately, selecting a payroll provider that offers a fair and transparent pricing model, while delivering cost-effective solutions, can contribute to the long-term success of your business.

The transition – implementation and change management
Understand the provider’s implementation process, data migration requirements, and security measures. Assess the training and support provided to ensure a smooth transition and thorough onboarding process.

Conclusion

Before deciding whether to keep a payroll function in-house or outsource it, it’s important to consider your business goal. A business priority is usually growth, so ask yourself do you have the dedicated staff resource for payroll management, and can they scale up rapidly. Is the person managing your payroll already wearing multiple hats? If so, this may spell disaster as soon as a mistake occurs or legislation changes. Are you confident in your process for handling pay queries to avoid an impact on staff retention? Do you have a training policy in place to ensure the payroll team is ahead of all payroll legislation?

Whether managing payroll in-house or outsourcing to specialised providers, organisations can streamline processes, reduce risks, and optimise their resources. By understanding the intricacies of the UK payroll system, evaluating the benefits of different approaches, and implementing best practices, businesses can ensure that their payroll department becomes a strategic asset, contributing to employee satisfaction, regulatory compliance, and overall business success.

Growth Partners’ payroll service

Growth Partners is a payroll provider and so much more. We own a payroll bureau so we have the expertise and scale required for outsourced payroll. We also provide the PEO model combining our expertise in payroll processing, pension auto-enrolment and employee engagement. Growth Partners is a great option if you are looking for a solution that takes on all liabilities with HMRC and The Pensions Regulator.

Our portal-based e-payslips mitigate the risk of data being intercepted with accredited data encryption. We use Amazon Web Services to host our sites, ensuring minimum downtime with extremely high levels of security.

We also provide:

  • A range of employee benefits including Employee Assistance Programme (EAP), private GP, pension guidance, and employee discounts.
  • A range of employer services, including free unlimited employment law support for the business, occupational health services and reduced rates with recruitment providers.
  • A dedicated employee engagement manager to help you and your employees most out of the services available.
  • Ongoing employee engagement consultation from our employee engagement experts so you have everything you need to not only ensure your employees are paid accurately and on time but are happy and healthy at work.

We provide all this at a flat rate of £2 per employee per week. And our new support payments offset this even further. Use our payroll cost-saving calculator to see how much you can save, or even earn by outsourcing your payroll to Growth Partners or book a demo here.

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Are you overpaying to outsource your payroll?

Are you overpaying to outsource your payroll? 1920 1221 Growth Partners

We’ve developed a new online payroll cost-saving calculator to help businesses understand if they are overpaying for their payroll.

If you’re overpaying to outsource your payroll, you’d like to know, right? So, our payroll experts have created an easy-to-use online calculator to help businesses ensure they’re getting value for money.

How much do businesses pay to outsource their payroll?

When it comes to outsourced payroll, many payroll providers have bespoke pricing – with several factors affecting the price such as:

  • Number of employees
  • Pension auto-enrolment processing
  • Frequency of payroll
  • Additional integrated services

The payroll fee varies between providers and can often decrease the more employees you have. So, if you have 300 employees, for example, some payroll providers could charge you £6 per employee per month, but if you have 30 employees, they may charge you £10 per employee per month.

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It’s important to also consider any added extra costs for administering pension auto-enrolment or processing ad-hoc payments such as maternity pay or sick pay, for example. Also, be sure to check the terms and conditions regarding processing furlough payments or similar which had a huge impact on payroll providers in 2020.

 

Who’s liable for compliance with HMRC when you outsource payroll?

When outsourcing to a traditional payroll provider, you will find they will process your payroll for you, but your business will still be 100% liable for their work and compliance with HMRC. So, any errors leading to fines will still be billed to you.

This, however, isn’t the case with all payroll providers, so be sure to ask. At Growth Partners, we take on full responsibility for compliance with HMRC requirements, so all our clients outsource both processing and the liabilities to us.

 

What happens to pension auto-enrolment employer duties when you outsource payroll?

Most, if not all, payroll software has a pension auto-enrolment module to help payroll providers carry out the auto-enrolment assessment. However, like payroll, compliance with your pension auto-enrolment employer duties sit squarely with the employer even when the payroll provider you have outsourced your payroll to agrees to administer the duties on your behalf.

With Growth Partners, you won’t need to worry about compliance with your auto-enrolment employer duties again – our dedicated pensions team will take full ownership and responsibility for compliance with your auto-enrolment duties.

 

My finance team process payroll, why would I outsource my payroll?

Outsourcing payroll to a qualified and professional payroll service can reduce the costs and risks involved in payroll management. It also allows you to use your resource better – instead of processing payroll and keeping on top of complex payroll regulatory requirements and constant updates, your finance team is free to focus on business objectives and corporate goals.

 

How much do we charge for outsourced payroll services?

We charge a flat rate of £2 per employee, per week. This doesn’t change regardless of how many employees you have, or your payroll frequency. We also don’t want to bill our customers every time they ask for help, so one fee covers everything.

One fee covers everything

We provide an end-to-end service for payroll, pension and employee engagement services, so our flat-rate fee covers so much more than just outsourced payroll…

 

Payroll services

  • A guarantee that all your employees are paid accurately, on time
  • Full compliance with HMRC regulations
  • 24/7 online access to pay documents for your employees

Pension services 

  • All auto-enrolment administration – never worry about managing your employees’ pensions again
  • We take on full responsibility for ensuring compliance with your auto-enrolment duties
  • Our in-house pensions team handle all auto-enrolment communications and administration duties

Wellbeing services

  • Financial wellbeing services for your employees including support and guidance for your employees on their workplace pensions
  • Emotional wellbeing services including an Employee Assistance Programme (EAP) with access to professional, confidential counselling services in-person, online or by phone
  • Physical wellbeing for your employees including 24/7 access to a GP

Employee discounts

  • The latest range of benefits and discounts for your employees to help make their wages go further. 

Employment law service for employers

  • Unlimited phone and email advice from a dedicated HR law consultant
  • Support to draft bespoke items of correspondence
  • Review and preparation of contractual HR documentation
  • On-site assistance in a crisis
  • Tribunal preparation and representation

Employee engagement support

We give all our clients their own dedicated employee engagement manager to help

  • Employee engagement consultancy strategy for employer/employees
  • Ongoing support from a dedicated engagement specialist 
  • Employee engagement support payment designed to help you invest in your employee engagement activities

Get a quote

We know from research employees want easy access to their pay documents. Online access to pay slips, receiving pay earlier than payday, and an online chat to sort out pay issues are the most sought-after financial benefits.

77% of employees would use employee engagement services more if they were all in one place, like an app. With our all-in-one solution, your employees can access their pay, pension, and employee benefits all in one place.

See how much you can save, or even earn with our new cost-saving calculator – get a quote here

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How New Forest Hotels improved benefits to employees while also improving payroll efficiencies

How New Forest Hotels improved benefits to employees while also improving payroll efficiencies 1152 1152 Growth Partners

The New Forest collection is made up of hotels, restaurants, and a pub all in the heart of the New Forest providing visitors with access to the breathtaking location. Employing a large workforce from chefs to receptionists, they were looking for ways to attract the very best talent.

The hospitality industry has been impacted by the pandemic and has since faced a huge candidate shortage on top of rising supply costs and decreased demand due to the cost-of-living crisis.

“We were originally looking for a professional payroll company to help with the administration of processing payments to our staff, Growth Partners presented the My SMART-e app to us and we loved it. They provide an all-in-one solution so little did we know they were able to help us in other areas of the business too.”

We’re working with New Forest Hotels to:

1. Streamline payroll processing

Reducing the load on their finance team and relieving them from the burden of keeping on top of pension auto-enrolment for a large, changeable workforce.

2. Support employee financial, physical and emotional wellbeing

By giving their staff access to thousands of employee discounts plus confidential emotional and physical wellbeing benefits – all in the same place where they access their pay documents.

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“Our payroll team had been processing payroll and pension auto-enrolments for many years with employees on varying contracts, we knew there was an easier, more efficient way to do it. Growth Partners took on the payroll responsibilities – and it was seamless. The transition was fantastic and the service, exceptional.

So, our employees can now access their pay and pension documents as well as a range of discounts (which has helped them financially in these uncertain times) plus an online GP, health checks and much more via their secure My SMART-e app. Our staff love it – it’s been really well received, and we see it as a huge benefit, not only to our current employees but when attracting additional staff too.”

Do you need help streamlining your payroll process or bringing services together all in one place?

We provide employers across all sectors with a cost-effective end-to-end service for payroll, pensions and employee engagement services. If your workforce could benefit from their pay, pension and employee benefits all in one place, book your no-obligation demo of My SMART-e here.

Did you know? We provide all our clients with an employee engagement support payment and a dedicated employee engagement manager. Contact us today to find out more about how we can help you to reduce costs, attract and retain employees, increase productivity and ensure compliance.

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Spring Budget 2023: How do the payroll announcements impact your business?

Spring Budget 2023: How do the payroll announcements impact your business? 1196 1308 Growth Partners

The Chancellor announced some important changes in the Spring Budget 2023, including some key announcements impacting payroll.

We’ve taken the opportunity to summarise some of the key measures set to be introduced from the view of business owners and finance directors with responsibility for payroll.

Tax rates and thresholds

It was announced that the following will remain frozen:

  • Standard Personal Allowance (£12,570)
  • Income Tax rates (20%, 40% and 45%)
  • Income tax threshold (basic and higher rate threshold)

However, from 6 April 2023, the additional rate income tax threshold will reduce from £150,000 to £125,140.

There were also some important updates in respect of National Insurance Contributions (NIC), including:

  • NIC thresholds will remain frozen
  • Rates of NIC for directors who are subject to an annual earnings period will revert to being the same as for other employed earners
  • Rates of Class 1A NIC on benefits-in-kind and Class 1B NIC payable on PAYE Settlement Agreements will revert to 13.8 percent.

Helping people back to work

Where both parents are employed, and each earns less than £100,000, the introduction of free childcare hours for all children from the age of nine months could help many parents return back to work. This will be introduced in stages from April 2024.

Further measures, including more wraparound care for school age children to also facilitate the return of parents to the workplace.

Helping people to stay in work

In a drive to encourage over 50s back into the workforce, the Chancellor announced:

  • The annual allowance (annual limit on UK tax relieved pension savings) will increase from £40,000 to £60,000,
  • Higher earners with ‘adjusted income’ of over £260,000 will still be subject to tapering of their annual allowance, but the maximum taper will result in a £10,000 annual allowance, relative to £4,000 at present.
  • Removal of the lifetime allowance.

Increasing employee engagement

The Chancellor confirmed:

  • Enhancements to tax-advantaged Company Share Option Plan (CSOPs), which is a tax-advantaged employee share scheme, which will see the employee share options limit doubled from £30,000 to £60,000,
  • The ‘worth having’ condition, which limits which types of shares are eligible for inclusion within a CSOP scheme, will be removed,

Charities and gift aid

Charitable tax reliefs are to be restricted to UK charities only, with donations to charities located in the EU and EEA no longer qualifying for UK charitable tax reliefs from April 2024. This will impact individuals who claim higher rate relief on donations to such non-UK charities.

Upcoming important government consultations

In summer 2023, the Government will consult on informal and ad hoc flexible working arrangements between employees and employers to better understand how these operate.

Additionally, the Government will consult on how the tax system might incentivise increased employer provision of occupational health support. This might potentially include expanding benefit-in-kind exemptions for employees and an enhanced deduction for the associated costs.

More information

See how new legislation may impact your responsibilities over the next 12 months by downloading our Payroll Changes summary.

 

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Need help navigating these key payroll announcements?

The announcements from the spring budget will affect businesses differently. Navigating any legislative changes and ensuring your organisation understands and implements the proposed changes can be challenging, especially given the financial and/or legal penalties associated with non-compliance – not to mention the negative impact it can have on the wellbeing of your staff.

To help understand how the announcements in the Spring Budget affect your organisation, you can contact our business growth experts

For more information about unburdening your business from payroll and pension compliance visit our SMART Employment page and read more about supporting your employees’ financial wellbeing, emotional wellbeing and physical wellbeing.

Amrik Birdi, Pension Consultant at Growth Partners

blankAmrik has a wealth of knowledge in pensions having joined Growth Partners from KPMG where he was responsible for advising companies and trustees on independent DC provider procurement exercises, DC investment strategy review, DC pensions strategy review, automatic enrolment compliance, and meeting ongoing governance requirements. Amrik spent three years before this as a Pensions Guidance Specialist at Pensions Wise helping members understand their pension and retirement options, empowering them to take control of their retirement journey. With a Diploma in Regulated Financial Planning and Certificate in DC Governance, combined with a Degree in Economics, Amrik is a fully qualified pensions consultant and able to offer strategic support to our clients on their options for workplace pension schemes and auto-enrolment.

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