Employer Pension Contributions

LadyMissA

Savvy_Sue wrote: »

Can't come soon enough, IMO, although I reckon it's going to be great fun getting staff signed up - even though it's a no-brainer as far as I can see, we struggle to get staff to fill in the forms needed for our stakeholder scheme. "Look, if you sign here, you'll get 2% of your salary going into a pension scheme. If you don't, you get nothing. Why not just sign???"

My brother is a senior pensions manager and I have asked him before about pensions (if I was to get a job with a company one that match like for like contributions) and he said it's not worth it at my age a I could not possibly get enough when I retire even with a contribution from the company.

InsertWittyName

LadyMissA wrote: »

My brother is a senior pensions manager and I have asked him before about pensions (if I was to get a job with a company one that match like for like contributions) and he said it's not worth it at my age a I could not possibly get enough when I retire even with a contribution from the company.

That sounds like genuinely bad advice.

To a certain extent, regardless of your age, you'd be throwing away free money that your employer would put into a pension for you!

As an example... you put an £80 contribution in and get £80 + £20 (assuming 20% tax bracket) + £100 from your employer = £200 from your original £80!

I've never come across a reason to NOT contribute the minimum required into a pension fund to ensure maximum matched contributions from the employer.

LadyMissA

InsertWittyName wrote: »

That sounds like genuinely bad advice.

To a certain extent, regardless of your age, you'd be throwing away free money that your employer would put into a pension for you!

As an example... you put an £80 contribution in and get £80 + £20 (assuming 20% tax bracket) + £100 from your employer = £200 from your original £80!

I've never come across a reason to NOT contribute the minimum required into a pension fund to ensure maximum matched contributions from the employer.

I read this
'
Key points of the Pensions Act 2008:

• The Pensions Act will take effect from 2012 and will be gradually introduced depending on employers' size.
• All employers must offer a qualifying workplace pension scheme and automatically enrol eligible employees. Those who do not must enrol staff into the system of personal accounts, which will be launched to provide access to a lost-cost pensions vehicle.
• At least 8% of an employee's qualifying earnings must be paid into a pension, which is made up of 3% employer contributions, 4% employee contributions, and 1% tax relief.
• Staff will be allowed to opt out of schemes, in which case, employers will no longer be liable for paying employee contributions.
• Employers will be able to self certify that their existing workplace pension schemes meet the minimum requirements set out by the act.

At 4% I wouldn't get £100 a month from an employer

How much would that get me a month then in 20 years?

LadyMissA

I was looking at Standard Life and if I was putting in £200 a month it would only get me £343 a month at aged 65

It was something like £800 a month to pay in if you wanted a 48% final salary pension.

Amanita_2

Savvy_Sue wrote: »

Many companies did not like NMW. Many did not like the requirement to give paid leave to all staff, full and part-time. Parental leave isn't that popular either.

My original point (and I admit I didn't make it very well!) is that in all but the smallest companies THERE MUST ALREADY BE ACCESS TO A PENSION SCHEME OF SOME KIND.

So, even if the employer is not making contributions, they HAVE to have something set up, and they HAVE to facilitate the employee making contributions to that scheme if they so wish.

So when the OP saysI say that unless it's a very small organisation (maybe fewer than 5 employees? not sure), the company is already obliged to provide information about whatever scheme they have set up, and to make payroll deductions if the employee requests it.

If I'm wrong about that, I'm sure Amanita will put me right!

snip

Can't come soon enough, IMO, although I reckon it's going to be great fun getting staff signed up - even though it's a no-brainer as far as I can see, we struggle to get staff to fill in the forms needed for our stakeholder scheme. "Look, if you sign here, you'll get 2% of your salary going into a pension scheme. If you don't, you get nothing. Why not just sign???"

Spot on Sue!

Actually amazes me how many young people don't take up the offer of employer pension conributions even when they don't need to contribute themselves.....

Sue - you won't need to sign them up at all! You must put them in regardless and start deducting contributions. If they don't want to be in then they will need to request an opt out form from the pension provider ( not from the employer- you are not allowed to provide them ), complete and return it. The theory is that most people will be too lazy to bother!

LadyMissA

Amanita wrote: »

Spot on Sue!

Actually amazes me how many young people don't take up the offer of employer pension conributions even when they don't need to contribute themselves.....

Sue - you won't need to sign them up at all! You must put them in regardless and start deducting contributions. If they don't want to be in then they will need to request an opt out form from the pension provider ( not from the employer- you are not allowed to provide them ), complete and return it. The theory is that most people will be too lazy to bother!

So even if you do not want to put in the company has to by law put in 3%? Is that what you are saying?

miriam_d

Hi,

I was the original poster and its been great to see so many replies.

My organisation doesn't currently provide a pension so its good to know that tehy will soon be legally obliged to.

When I was working for a different company in 2007 I had a pension of some sort. I was only there for a year or so but now I have no idea what's happened to that and where it is. What is the best way of finding out?

Thanks again,

M

Amanita_2

LadyMissA wrote: »

So even if you do not want to put in the company has to by law put in 3%? Is that what you are saying?

No. At the moment there is no legal requirement for the employer to make any contributions at all although many do.

When auto enrollment hits that will change. They will have to put in at least 3% of qualifying earnings but the employee will have to put in a further 4% themselves. The missing 1% is tax relief from the Govt.

If an employee opts out then there is no obligation on the employer to make the 3% contribution which is why there is another whole shed load of rules and regulations to stop an employer "encouraging" employees to opt out.

Amanita_2

miriam_d wrote: »

Hi,

When I was working for a different company in 2007 I had a pension of some sort. I was only there for a year or so but now I have no idea what's happened to that and where it is. What is the best way of finding out?

Thanks again,

M

Try the Pension Tracing Service

LadyMissA

Amanita wrote: »

No. At the moment there is no legal requirement for the employer to make any contributions at all although many do.

When auto enrollment hits that will change. They will have to put in at least 3% of qualifying earnings but the employee will have to put in a further 4% themselves. The missing 1% is tax relief from the Govt.

If an employee opts out then there is no obligation on the employer to make the 3% contribution which is why there is another whole shed load of rules and regulations to stop an employer "encouraging" employees to opt out.

So you don't get something for nothing .