Changes to company pensions

Posted by Joseph Hanlon on 4 March 2010

I was chatting to one of our regular members this mornings BRE Breakfast networking meeting and he asked me if I knew anything about the upcoming changes to company pensions as he had heard there were some things happening. As a financial adviser working for Forum wealth Management and specialising in pensions I guessed this was not a chance question! Of course I said, I know quite a bit about it as it happens.

He was mainly concerned with something he had heard that the current rule that an employer needs 5 employees to designate a Stakeholder Pension plan might be changed.

I outlined to him the forthcoming effects of the Pensions Act 2008 which means that an employer who employs 1 (one) or more people will not only have to set up a pension plan but will be obliged to contribute 3% minimum into it as an employer. The employee will have to contribute 5% as the new rules set a minimum of 8% of salary. So a generous employer might contribute 5 or 6% with the employee matching it.

One of the new quirks to the pension changes is that the new pension schemes must have an automatic joining facility and designated default fund.

This means that a new employee should be automatically enrolled in your pension scheme and there should be no requirement for them to have to fill out any forms. They may request to opt out but the employer will have to opt them back in again every couple of years.

This is to make sure that the balance should be on being in the scheme as opposed to out!

Forum wealth Management, I told him, can take care of the pension scheme for the employer and make sure it all runs sweetly.

This highlights one of the great benefits of networking with BRE networking. The access you have to a huge range of knowledge and experience and as it’s a friendly chat getting help is easy.