There has been a certain amount of panic amongst small businesses now that the enrolment scheme has reached even the smallest of employers. Some businesses thought they were safe by contracting with the self-employed but this may not be so. Employers need to put workplace pensions in place or face the wrath of the regulator.
It may be that on a long-term basis workplace pensions will eventually save the government the expense of having to pay a state pension, and this will place the onus of pension provision on the employer rather than the state.
That said, some workplace pensions are very cost effective and it depends upon the scheme as to whether employees want to “sign-up” or “opt out”. In either event the employer must have a scheme in place, even if no employee wants to be part of it. The government has also offered tax relief incentives to make the schemes attractive for employees.
Recent case law has also ensured that all of those businesses that once thought they were engaging, self-employed contractors, may in fact be employing workers entitled to a pension through a scheme.
So, if you are an employer, and if your employees are over 22 and earn at least £10,000 per annum, you need a scheme. If you are an employee or worker and over 22 and earn at least £10,000 per annum you should be offered the option of entering a scheme, if not now, certainly quite soon.
Need advice on workplace pensions, contact John Newcomb.