Company doesn't offer a pension

pension_worrier

Hi,

I have been offered a job at a small company that doesn't offer a pension scheme. I've been doing some research and I'm shocked at the number of small companies that don't offer pension schemes, around 96% of companies with less than 250 employees according to some sources. I've also read that the government is rolling out a scheme that will mean that all companies will have to offer a pension scheme and will have to contribute 3%, with the government contributing 1% and the employee contributing at least 4%. Is this accurate and still going ahead? Also any advice from anyone out there who works for a company that doesn't offer a pension scheme on how they save for retirement would be greatly appreciated.

Thanks

xylophone

http://www.pensionsadvisoryservice.org.uk/future-pension-reforms/automatic-enrolment
http://www.thepensionsregulator.gov.uk/employers/staging-date-timeline.aspx

JoeCrystal

pension_worrier wrote: »

Hi,

I have been offered a job at a small company that doesn't offer a pension scheme. I've been doing some research and I'm shocked at the number of small companies that don't offer pension schemes, around 96% of companies with less than 250 employees according to some sources. I've also read that the government is rolling out a scheme that will mean that all companies will have to offer a pension scheme and will have to contribute 3%, with the government contributing 1% and the employee contributing at least 4%. Is this accurate and still going ahead? Also any advice from anyone out there who works for a company that doesn't offer a pension scheme on how they save for retirement would be greatly appreciated.

Thanks

Yes... shocking! On one hand, it is good that employers are going to have to contribute some toward a pension scheme, on other hand, it is quite likely to be insufficient amount and they will just spread any pay rises between wage and pension instead.

Basically, they are phasing them in, starting with biggest companies and slowly include more and more smaller companies. Basically, companies with 160-249 employees will need to do it by 1st April 2014.

Secondly, employer minimum contribution will increase from 1% up to Sep 2017, 2% between Sep 2017 to Sep 2018 and finally 3% from Oct 2018. So not for a while yet for 3%. Of course, total minimum contribution is 2%, 5% and 8% at the same time.

You have to bear in mind that it would not be entire earnings . Minimum contributions will be payable on earnings between £5,564 and £42,475. So assuming a 40 hours employee on minimum wage (on £6.19 in Oct) would get £48.74 per month in the pension scheme at 8% contribution, (£12.19 at 2% and £30.46 at 5%). Which frankly is not much.

Well, I work for manufacturing company which only offer stakeholder pension scheme with no employer's contribution. Instead, I went to see an IFA, opened up personal pension scheme and pay into that instead.

Cheers

Joe

EDIT: And xylophone just simply posted the links to relevant pages...

RosieBee_2

hey,

JoeCrystal pretty much hit the nail on the head with the new scheme. Auto-enrolment will start later this year, but you might need to check staging dates for when your company will start enrolling its staff. With the smallest companies being given much more time, years in fact, you could consider a personal or private pension if you are looking to save.

RosieBee

opinions4u

Also any advice from anyone out there who works for a company that doesn't offer a pension scheme on how they save for retirement would be greatly appreciated

Many will see a bank's financial adviser and make private arrangements.

The more enlightened will sedan IFA and do the same. Www.unbiased.co.uk.

Many, unfortunately, do nothing.