Pensions

Your money checklist for the new financial year

Your money checklist for the new financial year

Your money checklist for the new financial year 1920 1280 Amrik Birdi

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.

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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 Amrik Birdi

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

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

Understanding pensions

Help your employees understand pensions better [Your Free FAQ Guide]

Help your employees understand pensions better [Your Free FAQ Guide] 1920 1280 Amrik Birdi

Pensions Awareness Week officially takes place 11 September – 15 September 2023 and it’s the perfect time to stop and think, how much do your employees know (or care) about their pension?

It’s been ten years since the introduction of automatic enrolment which was intended to help people make provisions for their retirement. Since the rollout of auto-enrolment, the participation rate has reached 88% according to the figures from Department for Work and Pensions, with economic pressures from the pandemic having very little impact on the pension opt-out rates.

As the UK now faces a cost-of-living crisis and the possibility of an economic recession, employee financial wellbeing becomes an even more important topic of conversation. Employees will be keen to know how to make their money stretch further, not just under the current economic climate, but also in the long run to fulfil their future objectives, for example, retirement plans.

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.

Download your free Employee FAQ Guide to Pensions

As part of Pensions Awareness Week, we’ve put together a guide which helps answer 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?

Download the Employee’s FAQ Guide to Pensions here

Do you need help with your pension engagement from pension specialists?

To find out more about how the team of pension specialists at Growth Partners can help you with your pension member engagement, please get in touch with us today or read more on our pension services page.

Pension auto-enrolment compliance

Ensuring pension auto-enrolment compliance: staying ahead of the curve

Ensuring pension auto-enrolment compliance: staying ahead of the curve 1280 720 Amrik Birdi

As a responsible employer in the UK, it’s crucial to comply with the pension auto-enrolment regulations. Whether you are a start-up or a well-established firm, staying up-to-date with the compliance legislation can be quite challenging, but failing to comply with the legal requirements can result in hefty fines and have damaging reputational consequences.

What is pension auto-enrolment compliance?

Pension auto-enrolment compliance is a legal requirement for employers in the UK to automatically enrol ‘eligible’ employees into a workplace pension scheme. The system was introduced in 2012 to address the growing problem of pension provision and encourage more workers to save for their retirement.

Under the scheme, employers are required to automatically enrol ‘eligible’ employees into a pension scheme, make a minimum contribution, and provide employees with information about the scheme and their rights. Employees do have the opportunity to opt out of the pension scheme if they wish.

The scheme aims to ensure that employees have the opportunity to save for their retirement in a workplace pension scheme, which can contribute to their financial security in later life.

 

Who needs to comply with pension auto-enrolment?

Employers of all sizes in the UK must comply with auto-enrolment regulations. This includes businesses, charities, and not-for-profit organisations. Additionally, even if you employ just one person, you are still required to comply.

Not all employees are classed as ‘eligible’ for auto-enrolment. To be automatically enrolled, an employee must meet the following criteria:

  • Be at least 22 years old but below the state pension age,
  • Work in the UK,
  • Earn a minimum of £10,000 per year.

Employers must provide a workplace pension scheme for eligible employees and make contributions to their pension. However, employees have the option to opt out of the pension scheme if they wish.

 

List of key duties employers must fulfil for pension auto-enrolment compliance

Employers have a legal obligation to enrol eligible employees into a pension scheme and make contributions on their behalf. Non-compliant businesses may receive harsh penalties, so it’s essential to ensure compliance with pension auto-enrolment regulations.

1. Assess your workforce

Assess your workforce and determine which employees are eligible for auto-enrolment. Remember to monitor any new employees who become eligible for auto-enrolment as per the legislation.

2. Choose a pension scheme

Select a pension scheme that meets the minimum requirements for auto-enrolment. Evaluate the different options available in the market and choose one that’s suitable for your business and employees.

3. Communicate with your employees

Inform your employees about auto-enrolment, including who is eligible, how it works, and the benefits of being enrolled.

4. Set up payroll processes

  • Make sure your payroll process includes auto-enrolment.
  • Ensure that eligible employees are enrolled and contributions are made on their behalf.

5. Keep records

  • Maintain records to demonstrate that you’re complying with auto-enrolment legislation.
  • Keep records of contributions, opt-ins, opt-outs, and all communications with your employees.
  • Submit your Declaration of Compliance to The Pensions Regulator.
  • Carry out your ‘re-enrolment duties’ every three years. 

By following this checklist, you can ensure that your business meets pension auto-enrolment regulations.  

Each of these duties is critical for ensuring that your business fully complies with pension auto-enrolment regulations. Failure to fulfil any of these duties can result in costly consequences, such as:

  • Fines from The Pensions Regulator can range from £50 per day to £10,000 per day depending on the size of your business and the level of non-compliance.
  • Lawsuits from employees who were not enrolled in a qualifying pension scheme could result in significant payouts for your business.
  • Damage to your business’ reputation, as failure to comply with pension auto-enrolment may be viewed as a breach of trust with your employees.

Common auto-enrolment problems faced by employers:

Employers often face several common problems when implementing the scheme, including.

  • Difficulty in selecting a qualifying pension scheme.
  • Ensuring all eligible staff are enrolled in the scheme.
  • Calculating and processing contributions accurately and on time.
  • Managing opt-outs and opt-ins properly.
  • Keeping accurate records for reporting and compliance purposes.

If as an employer you fail to address these issues, you may face penalties for non-compliance.

 

Why pension auto-enrolment compliance should be a priority for your business in the UK

Pension auto-enrolment compliance is a legal obligation that applies to all businesses operating in the UK. Failure to comply with the regulations could lead to financial penalties and reputational damage for your business. Therefore, businesses must take pension auto-enrolment compliance seriously and ensure they fulfil their duties as employers. This will not only ensure compliance with the law but also provide employees with a valuable benefit for their future.

 

How we can help keep you compliant:

As you can see, ensuring auto-enrolment compliance is not a one-off task and does require allocating suitable and competent resources to ensure compliance with employer duties. 

All our clients benefit from our fully comprehensive and compliant pension solution. This includes:

  • Auto-enrolment processing and administration – you never have to worry about managing your employees’ pensions again.
  • We take on full responsibility for ensuring compliance with your auto-enrolment employer duties.
  • Your employees can speak to our in-house friendly experts to get one-to-one support and guidance on their workplace pensions. 
  • Online trackable pension pot for full visibility of the pension scheme. 

We will help you stay on top of your auto-enrolment employer duties and compliance, as well as help your employees engage with their pensions. Book a demo of our services or contact us to find out more.


Amrik Birdi, Pension Consultant and 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.

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Spring Budget 2023: What do the pension announcements mean for you and your employees?

Spring Budget 2023: What do the pension announcements mean for you and your employees? 1920 1413 Amrik Birdi

In the run-up to the Spring Budget, there were expectations that this could be the most significant budget for pensions since the freedom and choice reforms announced in the Budget 2014 – and the Chancellor certainly didn’t disappoint in that regard.

The announcements made by the Chancellor in the Spring Budget will have far-reaching implications for high earners. We break down the key announcements below and explain what they mean for employers and their workforce.

  • Pension Annual Allowance will increase from £40k to £60k – the pension annual allowance (AA) is the total amount of money that can be paid into the pension in any tax year without the member/employee incurring a tax charge. This includes both Employer and Employee contributions. It was either £40,000 or 100% of total earnings – whichever is lower. But it’s now going up to a maximum of £60,000 on 6 April 2023. 
  • Tapered Annual Allowance will increase from £4k to £10k – certain higher earners may be impacted by a tapered annual allowance, which gradually reduces the amount you can save into a pension plan each tax year depending on your earnings. The Chancellor has now confirmed that the tapering won’t reduce the allowance to any lower than £10,000 (previously set to £4,000).
  • Money Purchase Annual Allowance (MPAA) will increase from £4k to £10k – when an individual starts to drawdown or cash in the taxable part of their pension, MPAA is triggered. This means the individual will see their annual allowance reduced from £40,000 to £4,000 each tax year. The MPAA is now going up from £4,000 to £10,000 – making it easier for people to keep working and saving once they’ve started taking money from their pension.  
  • Lifetime allowance (LTA) will be removed entirely  – LTA is the total savings you can build up in all your pensions in your lifetime. Previously, the LTA limit was set to £1,073,100. This meant those who exceeded this limit would be liable to a tax charge of up to 55% on the amount over the allowance. The Chancellor announced that the lifetime allowance would be removed completely, and no one would face a lifetime allowance tax charge from 6 April 2023.

An important consideration for employers

Each of these changes on their own would see many people positively impacted when it comes to pension savings:

  • The Pensions Annual Allowance and Tapered Annual Allowance boost will benefit many higher-paid workers.
  • The increase to the Money Purchase Annual Allowance will directly benefit many people who’ve had to dip into their pension due to the cost-of-living crisis whilst still working, allowing them to contribute more into their pension to refill their pension pot without fear of a tax charge.
  • Abolishing the Lifetime Allowance opens doors to use pensions to pass on unlimited amounts of wealth, tax efficiently, to the next generation.

Employers will need to consider how the announcements could impact employee behaviour as they look to maximise the benefits of these changes and their employee benefits offerings. This could include (but is not limited to):

  • dealing with re-enrolment requests
  • managing employee requests to increase contributions, including ad hoc payments into their pension plans.
  • reviewing life insurance arrangements
  • reviewing benefits employers have offered to higher earners, particularly those higher earners previously impacted by the Lifetime and/or Annual Allowance.

As employees grapple with how to maximise savings in the new system, employers could benefit from greater support in balancing the opportunities and risks and ensuring their valued workforce have access to the support needed to understand the changes and its implications to get the best outcomes.

Need some help navigating these pension announcements?

Pensions can be complex; however,  our business growth experts can support you and your employees.

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.

Pension pot

Government backs bill which will extend pension auto-enrolment to younger and lower paid workers

Government backs bill which will extend pension auto-enrolment to younger and lower paid workers 1920 1282 Amrik Birdi

New plans to expand auto-enrolment were backed by the Department for Work and Pensions (DWP) on Friday 3 March and are likely to be phased in early to mid-next year.

Auto-enrolment (AE) laid the foundation for a new era of pension savings, and since its introduction in 2012, the number of people saving into a workplace pension has doubled. To build on this success, the Department for Work and Pensions (DWP) confirmed on Friday (3 March) that it will support proposals to expand auto-enrolment – measures which will see auto-enrolment extended to younger people and lower paid workers.

In this article, we will explore what this means for employers.

What happens currently with pension auto-enrolment?

Under auto-enrolment, UK employers are legally required to put all their ‘qualifying’ employees into a workplace pension and contribute to their pension savings.

A ‘qualifying’ employee is someone who:

  • works in the UK
  • is at least 22 years old, but under State Pension age, and
  • earns more than £10,000 a year.

The minimum contribution (3% employer and 5% employee) applies to any earnings over £6,240 up to a limit of £50,270 (in the tax year 2022/23). This slice of the employee earnings is known as ‘qualifying earnings.’

What are the new proposals for expanding pension auto-enrolment?

The Private Members Bill looks to grant two extensions to auto-enrolment:

  1. Abolishing the £6,240 lower earnings limit for contributions
  2. Reducing the age for being automatically enrolled from the current 22 to 18.

In its press release, DWP stated that ‘lowering the age at which eligible workers must be automatically enrolled into a pension scheme by their employers from 22 to 18 would make saving the norm for young adults and enable them to begin to save from the start of their working lives’.

In addition, it said ‘the removal of the lower earnings limit would support those with low earnings and multiple jobs by ensuring they are saving from the first pound earned’.

When are the changes being introduced?

While the Bill will have to complete its remaining stages in the House of Commons and will also need to be approved by the House of Lords, Former Pensions Minister, Steve Webb, stated that this was “unlikely to be a problem with government support”.

With the next General Election to take place no later than January 2025, we anticipate the phasing of these proposals early to mid-next year.

How will the changes impact employers?

  • Reducing the age threshold from 22 to 18 may increase the pool of ‘qualifying’ employees for many employers.
  • Deducting pension contributions from the first pound earned – as opposed to deducting contributions from the slice of the employee earnings which fall between the £6,240 and £50,270 bracket – will mean the 3% employer contribution will need to be calculated from an expanded portion of the employee earnings.
  • Payroll teams will need to ensure the necessary changes are implemented in a timely manner to maintain correct deduction of contributions.
  • Member communications need to be considered – employers will need to liaise with their pension provider to understand member communications regarding both content and timing, as the changes will invariably have an impact on the employees’ take-home pay.

There is a statutory requirement for the DWP to carry out a consultation before releasing the official implementation approach and timings, so we don’t expect the Secretary of State to exercise its powers to amend the age limit and lower qualifying earnings limit for auto-enrolment until next year.

Employers could benefit from having early conversations about what the change means for them because the proposals are likely to impact employers in respect of both their direct and indirect costs resulting from higher employer contributions, administration costs arising from embedding the changes to their payroll system to ensure compliance with its auto-enrolment employer duties, as well as ensuring members are communicated with through appropriate channels before, during and post implementation of the aforementioned proposals.

Need some help with pension auto-enrolment?

Pensions can be complex; however, our in-house experts you can speak to our business growth experts who can help simplify as well as support you with your auto-enrolment compliance requirements.

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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Cost of living crisis – is there a way out for you and your employees?

Cost of living crisis – is there a way out for you and your employees? 1920 1280 Amrik Birdi

Whether it’s soaring inflation, rising interest rates or changes announced in the Chancellor’s 2022 Autumn Budget, the cost of living crisis is impacting us all and hitting people differently.

Employees on a low income are impacted more as a bigger proportion of their income is eaten up by inflation. Those approaching or thinking about retirement will now need their pension pot to go further, raising questions about whether they can afford to retire or if retirement is sustainable. For others, the cost of servicing debt – be it credit card payments or mortgages – is leaving them with less money each month, forcing individuals to make trade-offs between necessities and savings. 

Furthermore, numerous scholarly articles have proven financial worries can impact employee productivity, mental health, lack of focus at work and absenteeism.

Without the help, and at least some level of guidance from their employers, employees may be likely to believe there are only two possible ways out of this crisis:

  1. Increase in pay in line with inflation this is one option to help employees cope, but this is not always possible, and even if it is, companies are unlikely to be able to keep up with rampant inflation. 
  2. Cut back on spending – without a pay increase, employees are likely to resort to cutting back spending and savings including pension contributions, which may impact their retirement lifestyle significantly.

How to support your employees to navigate the cost of living crisis

In some (limited) circumstances, increasing staff pay or cutting spending may well be the only way out of this crisis, but in most other circumstances there are other ways employers can support their workforce to navigate through the cost of living crisis and improve their employees’ financial wellbeing. 

We outline below some of the ways to help your staff improve the way they manage their money:

  • Employee benefits and discount scheme
    Discount schemes help employees save money on the things they want and need to buy. These can really make a difference now that people are seeing increased pressure on their finances. Making purchases via the employee discount scheme can help ease the financial squeeze because of soaring inflation. A recent survey by Opinium found that 36% of UK adults say they are already cutting back on what they spend.
  • Employee Assistance Programme (EAP) 
    This can help employees cope with the pressure that everyday life brings, and prevent personal problems impacting their work performance, health and wellbeing. An EAP can offer employees a wide range of support, including online resources, counselling, and referral services if they are struggling.
  • Pension guidance and awareness
    When times are tough financially, it may be tempting to reduce or stop pension contributions without understanding the long-term implications. In fact, according to research carried out by Barnett Waddingham, 7% of people plan to reduce their workplace pension contributions to keep up with the increased cost of living. This translates to 1.05 million people. Pension is not only one of the biggest perks in the workplace, but also an important, and for many, the only source of income in retirement. Therefore, it’s more important than ever that the benefits of pensions are well communicated to help employees avoid making decisions that they will likely regret later in life.
  • Financial education
    Financial education and guidance in the workplace can make a huge difference, giving employees the opportunity to learn about budgeting, money-saving tips, debt management, retirement planning etc. This can help employees make their money stretch further. Financial guidance can also encompass signposting to external services, for example, budgeting tools are available online such as Money Helper’s budget planner.
  • Salary sacrifice schemes
    Offering employees the option to exchange part of their pre-tax salary for ‘non-cash’ benefits such as childcare vouchers, company car, cycle to work scheme or additional pension contributions, is another way to help employees ease the squeeze on their finances without adding any extra costs to the employer. In fact, like the employees, employers also save money through the scheme by paying lower National Insurance contributions on the reduced employee wages – savings which can also be allocated to other areas of the business. Offering a salary sacrifice scheme is an excellent tool for employers to attract talent to the organisation.

The cost-of-living crisis is expected to be an unwelcome guest in the UK for some time so, supporting employees to build their financial resilience and improve their financial and emotional wellbeing is especially important right now. 

For more information about how we can help you and support your employees navigate through the cost of living crisis, visit our SMART Employment page and read more about supporting your employees’ financial wellbeingemotional 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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Chancellor’s Autumn Statement 2022: How does it impact pay and pensions?

Chancellor’s Autumn Statement 2022: How does it impact pay and pensions? 1920 1280 Amrik Birdi

Chancellor Jeremy Hunt’s 2022 Autumn statement focused on prioritising stability, growth and public services but what does this mean for your employees’ pay and pensions?

The chancellor announced that the tax take from his fiscal statement will increase by just 1% over the next five years, and still ensure the UK maintains the most generous tax-free allowances of any G7 country. The thresholds and allowances previously announced for the highest earners however are set to change.

The chancellor was somewhat muted on the pensions front, with the only mention being the reinstatement of the state pension ‘triple lock’.

What are the key tax changes, what is the ‘triple lock’ and how does it affect the state pension?

How will the tax changes affect employees?

It’s good news in relation to tax bands for low earners – they haven’t been reduced so the income tax personal allowance is frozen at £12,570 until April 2028. Only employees earning more than this will pay tax and, of course, they will only pay tax on anything above £12,570*

*For higher earners, the £12,570 personal allowance will be reduced by £1 for every £2 of ‘adjusted net income’ earned between £100,000 and £125,140, again frozen until 2028.

The basic rate tax band will remain the same until 2028. For higher earning employees, the threshold for the 45% additional rate tax will be cut from £150,000 to £125,140 from April 2023.

Unlike the state pension however, the tax thresholds have not been increased in line with inflation.

What is the triple lock?

Introduced in 2010 by the Conservative-Liberal Democrat coalition government, triple lock guarantees that, each year, the state pension will rise by whichever rate is the highest of either:

  • Average earnings
  • Inflation – as measured by the Consumer Prices Index (CPI), or
  • 5%

As an example, if average earnings rose by 3% and inflation rose by 5%, then the state pension would be increased by 5%.

Why was the triple lock system introduced?

The triple lock was introduced to protect pensioners against the impact of inflation on money.

If the state pension didn’t increase at least in line with inflation, then you wouldn’t be able to buy as many goods and services with your pension as you did before.

Why was the triple lock reinstated in the Autumn Budget 2022?

Following the coronavirus pandemic, average wages were rising by over 8%, and sticking with the triple lock rules would have meant the state pension would also need to rise by 8% – an unprecedented increase which the government never saw coming!

As a result, the government announced the suspension of the triple lock for the 2022-23 tax year to ensure fairness between pensioners and taxpayers.

Retention of the triple lock was a Conservative Party manifesto commitment and has been the topic of much debate over affordability recently, however, in his 2022 Autumn Statement, the Chancellor confirmed that the triple lock will be reinstated from April 2023.

This means that, for the 2023-24 tax year, the state pension will rise in line with September’s inflation rate (10.1%) a formula outlined in the state pension triple-lock guarantee. For some people, the state pension will be worth over £10,000 next year!

In conclusion, this may be good news for some employees in relation to their pay and pension but as inflation rises, so does the cost of living. As an employer, it’s important to be aware of the changes and the potential impact on employees, not only financially but emotionally too.

Employees can check their income tax with their Government Gateway ID on the GOV.UK website

Employees can see how much state pension they’ll get and when using the GOV.UK State Pension Forecast

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.

Money advice online

RETIREMENT: How do you know if you are financially on track?

RETIREMENT: How do you know if you are financially on track? 1340 1006 Amrik Birdi

A simple three-step guide: estimate, calculate and plan

Deciding how and when to retire is one of the most significant life decisions. Longer life expectancy, volatile investment markets, ever-changing regulations, and the various options for withdrawing your pension can make retirement seem understandably daunting.
On top of this, the concept of ‘retiring’ is open to interpretation: for some, retirement plans involve spending time with family, holidays abroad and home renovations. Others might consider working part-time and pursuing phased retirement, or prioritising a lifelong hobby or passion.

 

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Our simple three-step guide: ‘estimate, calculate and plan’ will help you prepare for your retirement, whatever your plans may be.

 

ESTIMATE

Estimate your annual cost of living. Future expenses can be hard to predict; you can reach a ballpark figure by doing the following:

  1. Review your current regular outgoings (household expenses, travel and leisure, mortgage/rent payments)
  2. Subtract any expenses you no longer expect to have in retirement
  3. Consider any anticipated/planned expenses (travel plans or replacing a car, for example) or future costs that may come up

Various online calculators can help you estimate your total annual living costs. The budget planner from the government’s MoneyHelper website is one such example.
An alternative way to estimate your cost of living in retirement is to use ‘The Retirement Living Standards’ by the Pensions and Lifetime Savings Association. This guide forecasts what retirement life may look like based on three annual income categories:

 

blankSource: Home – PLSA – Retirement Living Standards

 

CALCULATE

Calculate your retirement pot – it is important to consider all sources of income when approaching retirement. You will need to factor the following into your expected pension pot:

  1. State Pension – most people will be entitled to a government-provided State Pension from age 66 (rising to 67 between 2026 and 2028). To check how much State Pension you can get and when you should expect to receive it, you can visit Check your State Pension forecast – GOV.UK (www.gov.uk) and follow the online instructions.
  2. Workplace Pension – check how much you have accumulated in your workplace pension through your employer.
  3. Other Pensions – check how much you have accumulated in private pensions or pensions established under different employers. If you need to find contact details for a lost pension (workplace or personal), you can visit Find pension contact details – GOV.UK (www.gov.uk) and follow the online instructions.
  4. Other investments – you should also consider other forms of income down the line, for example, individual saving accounts (ISAs), investments (including property rental income) and any potential inheritance.

 

PLAN

Plan to reach your retirement goals – this is a two-step process. Step 1 – Once you have totalled up your savings and various sources of income, it’s time to estimate your expected income.

  1. Pension income – there are various pension calculators available online that can estimate the income you’ll get when you retire. You can use MoneyHelper’s pension calculator by visiting Use our pension calculator | MoneyHelper and following the online instructions.
  2. Investment income – various investment calculators are available online to help you calculate what your investments will be worth in the future. It’s best to use the investment calculator of the provider with whom you have invested.

This will then help you project the value of your pension and investments when you reach retirement age.
Step 2 is to determine whether these projections match your estimated annual cost of living.

Don’t worry if your initial projections don’t match your estimated annual cost of living in retirement. There are various options available to you. Working with a financial advisor or retirement planner can help you develop a plan that aligns with your retirement goals. To find an advisor near you, please visit Match with your professional adviser | Unbiased.co.uk.