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  • FIRST POST
    • kevs.
    • By kevs. 15th Mar 17, 1:22 PM
    • 1Posts
    • 0Thanks
    kevs.
    New Pension Rules.
    • #1
    • 15th Mar 17, 1:22 PM
    New Pension Rules. 15th Mar 17 at 1:22 PM
    I own a sandwich bar, I have four members of staff, 2 full time and 2 part time.

    The profit is not massive, but I make a living and pay the girls the minimum wage. However, the new Pension rules are a real worry, I just can't afford to contribute to it, but I have read that I have to offer it to at least the full time staff.

    I don't want to lose staff but I may have to down size in order to pay a pension. I have tried to get help from the government website but it doesn't really cover what to do if you can't afford to pay it. Help would be appreciated.
Page 1
    • molerat
    • By molerat 15th Mar 17, 2:19 PM
    • 16,004 Posts
    • 10,178 Thanks
    molerat
    • #2
    • 15th Mar 17, 2:19 PM
    • #2
    • 15th Mar 17, 2:19 PM
    There is no option not to afford it, I am afraid it is just another cost of being an employer.
    Last edited by molerat; 15-03-2017 at 2:22 PM.
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    • Number75
    • By Number75 15th Mar 17, 2:45 PM
    • 115 Posts
    • 93 Thanks
    Number75
    • #3
    • 15th Mar 17, 2:45 PM
    • #3
    • 15th Mar 17, 2:45 PM
    My husband runs a small business, similar situation that it pays him and his staff (above minimum wave though) but there is no profit after that. In fact due to previous problems he draws a lower salary than some staff for a period. He's putting prices up.
    • spadoosh
    • By spadoosh 15th Mar 17, 3:21 PM
    • 4,153 Posts
    • 5,380 Thanks
    spadoosh
    • #4
    • 15th Mar 17, 3:21 PM
    • #4
    • 15th Mar 17, 3:21 PM
    We employ about 50 staff, about 20 qualify for auto enrollment. Of those 20 we pay about £300 per month in total contributions. That averages £15pp, of which the employee pays just under half from their salary. When its running full whammy (3% from 2019 on) thatll be a cost of about £22.50 per employee to the company per month.

    Its not massively expensive but understand on fine margins its an unwanted cost.

    Essentially on minimum wage auto enrolment will only become effective when working 25+ hours a week or more.

    Theres probably a direct correlation between auto enrolment and the increase in zero hour contracts.
    Don't be angry!
    • lavvy
    • By lavvy 15th Mar 17, 5:47 PM
    • 20 Posts
    • 1 Thanks
    lavvy
    • #5
    • 15th Mar 17, 5:47 PM
    • #5
    • 15th Mar 17, 5:47 PM
    I have a friend who is in the same position, he employs six full time staff, his turn over is so small he would be working at a loss. Being an employer nowadays has so many pit falls it's sometimes not worth it. I think he is going to try and talk his staff out of joining by offering them a small pay rise, which will be less than the pension contribution. His staff are all in their early 20's so pensions are not something they worry about. If he can't get it to work he will have to cut their hours and make them part time. He hasn't discussed it yet but that is his plan. It's such a shame but he believes that the whole system has not been very well thought out.
    • xylophone
    • By xylophone 15th Mar 17, 6:00 PM
    • 20,938 Posts
    • 12,010 Thanks
    xylophone
    • #6
    • 15th Mar 17, 6:00 PM
    • #6
    • 15th Mar 17, 6:00 PM
    I think he is going to try and talk his staff out of joining by offering them a small pay rise, which will be less than the pension contribution. His staff are all in their early 20's so pensions are not something they worry about
    http://activeenrolment.co.uk/my-staff-dont-want-a-pension/



    http://www.thepensionsregulator.gov.uk/en/employers/what-happens-if-i-dont-comply.aspx
    • LXdaddy
    • By LXdaddy 15th Mar 17, 6:27 PM
    • 650 Posts
    • 397 Thanks
    LXdaddy
    • #7
    • 15th Mar 17, 6:27 PM
    • #7
    • 15th Mar 17, 6:27 PM
    ... I think he is going to try and talk his staff out of joining by offering them a small pay rise, which will be less than the pension contribution.
    Originally posted by lavvy
    That's not a very thing to do - it will get you into deep do do. So don't.
    • MoneySavingUser
    • By MoneySavingUser 15th Mar 17, 7:51 PM
    • 1,587 Posts
    • 635 Thanks
    MoneySavingUser
    • #8
    • 15th Mar 17, 7:51 PM
    • #8
    • 15th Mar 17, 7:51 PM
    I own a sandwich bar, I have four members of staff, 2 full time and 2 part time.

    The profit is not massive, but I make a living and pay the girls the minimum wage. However, the new Pension rules are a real worry, I just can't afford to contribute to it, but I have read that I have to offer it to at least the full time staff.

    I don't want to lose staff but I may have to down size in order to pay a pension. I have tried to get help from the government website but it doesn't really cover what to do if you can't afford to pay it. Help would be appreciated.
    Originally posted by kevs.
    Have you worked out how much it will cost exactly?

    Example - employee earns £20,000 per year
    Qualifying earnings start at £5,824/year so pensionable pay is: £14,176 of which you have to pay 1% as the employer which is: £141.76 per year which is £11.81 per month which is tax deductible so lets assume you pay tax at 20% the real cost is then £9.45 per month

    I assume your staff are all on this amount or less as a salary?
    • lavvy
    • By lavvy 16th Mar 17, 10:52 AM
    • 20 Posts
    • 1 Thanks
    lavvy
    • #9
    • 16th Mar 17, 10:52 AM
    • #9
    • 16th Mar 17, 10:52 AM
    In that case I would probably just tell the staff that you are making them all part time, that way it would prevent you having to pay into the pension. It may be harsh but if they are offered the choice of no job or part time work it's a no brainer. Maybe they could claim working tax credits. There has to be a way round it.
    • molerat
    • By molerat 16th Mar 17, 11:55 AM
    • 16,004 Posts
    • 10,178 Thanks
    molerat
    In that case I would probably just tell the staff that you are making them all part time, that way it would prevent you having to pay into the pension. It may be harsh but if they are offered the choice of no job or part time work it's a no brainer. Maybe they could claim working tax credits. There has to be a way round it.
    Originally posted by lavvy
    Only by cutting them down to below 15 hours per week (at minimum wage), above that they have the right to the pension and employer payment if they ask. The absolute minimum hours for WTC is 16. I can see the headlines in the local rag - "Mean Sandwich Shop Owner Cuts Staff Hours To Avoid Paying Pension" - the pension payments would likely become the least of their financial worries.
    Last edited by molerat; 16-03-2017 at 12:00 PM.
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    • lavvy
    • By lavvy 16th Mar 17, 1:05 PM
    • 20 Posts
    • 1 Thanks
    lavvy
    What a ridiculous reply. After all these days teenagers are lucky to get a job at minimum wage, the ages range from 18 - 22, are you seriously telling me that at that age you were bothered about your pension. Any way it was the OP who had a sandwich bar, not my friend. These days it's not surprising zero hour contracts are popular with employers.
    • xylophone
    • By xylophone 16th Mar 17, 1:19 PM
    • 20,938 Posts
    • 12,010 Thanks
    xylophone
    are you seriously telling me that at that age you were bothered about your pension.
    Whether worried or not is not the point at issue.

    These days it's not surprising zero hour contracts are popular with employers.
    I wonder if those same employers are saving into their own pensions (from the profits generated by the employees' labours as well as their own)?

    It's only those inferior beings whom they deign to employ who are not entitled to expect a contribution towards their retirement plans?
    • spadoosh
    • By spadoosh 16th Mar 17, 1:24 PM
    • 4,153 Posts
    • 5,380 Thanks
    spadoosh
    What a ridiculous reply. After all these days teenagers are lucky to get a job at minimum wage, the ages range from 18 - 22, are you seriously telling me that at that age you were bothered about your pension. Any way it was the OP who had a sandwich bar, not my friend. These days it's not surprising zero hour contracts are popular with employers.
    Originally posted by lavvy
    I think you miss the whole concept of the workplace pension. Its exactly because 18-22 year olds (not specifically that age more that people in general) dont think about their pension that this has been enforced.

    I was those 18-22 year olds and said no. Im now 30 and based on the 3% / 4% contribution from 2019 ill be looking at a pension of ~£2500 a year. Had i contributed from 20 (i added 10 years (from 65 to 75) on the calculator) it would be close to doubling my annual pension.

    I dont know what your inferring about 'these days' but every single person i know who is 18-22 who has a job earns NMW. Its a legal requirement. As is the workplace pension. If your friend suggests to his staff that they dont pay in and or offers incentives otherwise theres a few things hes doing. Firstly breaking the law, your not allowed to do that. Anyone found to do that will face the consequences. The second thing he is doing is putting people retirements at risk. That, to me at least, is the biggest douche move.

    If you cant make profit playing to the rules, you dont have a viable business.
    Don't be angry!
    • mgdavid
    • By mgdavid 16th Mar 17, 4:24 PM
    • 5,103 Posts
    • 4,263 Thanks
    mgdavid
    In that case I would probably just tell the staff that you are making them all part time, that way it would prevent you having to pay into the pension. It may be harsh but if they are offered the choice of no job or part time work it's a no brainer. Maybe they could claim working tax credits. There has to be a way round it.
    Originally posted by lavvy
    What a ridiculous reply. It's already been shown that the cost to the business is minimal.
    A salary slave no more.....
    • greenglide
    • By greenglide 16th Mar 17, 4:28 PM
    • 2,586 Posts
    • 1,631 Thanks
    greenglide
    If the business cannot afford to pay the 1% employer's contributions what will they do when the minimum wage is increased as they obviously cannot continue?

    It may be harsh and difficult but the minimum that people are due is the minimum wage and the mandatory pension contribution.
    • lavvy
    • By lavvy 16th Mar 17, 5:40 PM
    • 20 Posts
    • 1 Thanks
    lavvy
    Whether worried or not is not the point at issue.



    I wonder if those same employers are saving into their own pensions (from the profits generated by the employees' labours as well as their own)?

    It's only those inferior beings whom they deign to employ who are not entitled to expect a contribution towards their retirement plans?
    Originally posted by xylophone
    I delighted to hear you agree with me!

    Apart from the issue in question we are not talking about me, I was just adding the opinion of an acquaintance and what they were thinking of doing.
    Regardless to whether it's the law or not doesn't mean that it doesn't happen.
    Desperate people do desperate things. Quite frankly I couldn't care less as it doesn't affect me in the least.
    • westv
    • By westv 16th Mar 17, 6:15 PM
    • 4,158 Posts
    • 1,753 Thanks
    westv
    Isn't this similar to those employers who cut their employees hours in order to "comply" with the new living wage?
    • going.for.gold
    • By going.for.gold 16th Mar 17, 8:16 PM
    • 8 Posts
    • 0 Thanks
    going.for.gold
    I have a cleaner that comes in three times a week, and her husband is my gardener do I have to offer them a pension option? I sincerely hope not, I didn't know anything about it.
    • Number75
    • By Number75 16th Mar 17, 9:19 PM
    • 115 Posts
    • 93 Thanks
    Number75
    You're not their employer. They are self employed and your buy their services. So - no.
    • xylophone
    • By xylophone 17th Mar 17, 1:57 AM
    • 20,938 Posts
    • 12,010 Thanks
    xylophone
    I delighted to hear you agree with me!
    And how do you make that out?
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