Company moved goal posts ?

doris540

Been notified that company is ceasing using Nest and is going over to Aviva. The DC pot will stay with Nest unless I want to move it they will not automatically transfer it. However they are now basing contributions on Basic salary unlike with Nest when bonuses and overtime were all included. I can obviously pay more but their 3 per cent is on basic salary and that is it. For me personally it will make a difference of around £50 ER contribution a month Some however will be far worse off . To me basically the company is off setting the NI insurance increases to the work force pension contributions.

El_Torro

OK. That sucks, but I doubt there's much that can be done about it. Assuming it doesn't go against your contract of employment it doesn't sound like your employer has done anything that isn't legal. 

DRS1

Does your employment contract spell out what the employer contributions are?  Doe it allow the employer to change them without your consent?

Are they saying that by agreeing to join the Aviva scheme you are also agreeing to the change in employer contributions so there is no breach of contract on their part?  Have you actually signed anything? 

Are they giving you a Hobson's choice of joining the new scheme with the new contributions or opting out of having any pension?

JoeCrystal

Yep, it does suck. It happened to me as well. my own auto-enrollment pension scheme used to be on a salary plus bonus and overtime. Eventually, they reduce it to the auto-enrollment minimum above £6,240 strictly. Might be worth confirming if they actually meant 3% of the salary between £6,240 and £50,270. My employer's reason was actually to ensure that the lowest-paid workers in the company can afford to contribute. 

Time4T_Accounts

My understanding is that bonuses and overtime form part of qualifying earnings - and so the employer’s contribution should include these, no matter who the scheme is with.

Marcon

DRS1 said:

Does your employment contract spell out what the employer contributions are?  Doe it allow the employer to change them without your consent?

That's the key question here.

DRS1 said:

Are they saying that by agreeing to join the Aviva scheme you are also agreeing to the change in employer contributions so there is no breach of contract on their part?  Have you actually signed anything? 

If Aviva becomes the auto enrolment scheme, then employees don't have to 'agree' to join it.

DRS1 said:

Are they giving you a Hobson's choice of joining the new scheme with the new contributions or opting out of having any pension?

The reduction in employer contributions is a contractual matter, so that's what OP needs to check. Simply changing provider doesn't automatically alter that.

JoeCrystal said:

Yep, it does suck. It happened to me as well. my own auto-enrollment pension scheme used to be on a salary plus bonus and overtime. Eventually, they reduce it to the auto-enrollment minimum above £6,240 strictly. Might be worth confirming if they actually meant 3% of the salary between £6,240 and £50,270. My employer's reason was actually to ensure that the lowest-paid workers in the company can afford to contribute. 

...which they could have accomplished by the simple expedient of keeping employer contributions as they were, but changing the (earnings) basis on which employees were required to contribute. That would still meet the legal requirement provided that minimum contributions based on qualifying earnings were being paid in total.

El_Torro

Time4T_Accounts said:

My understanding is that bonuses and overtime form part of qualifying earnings - and so the employer’s contribution should include these, no matter who the scheme is with.

I don't get paid overtime but my annual bonus does not get any employer pension contributions. My employer (which is a large multinational) could be breaking the law in this, though I doubt it. 

bjorn_toby_wilde

Time4T_Accounts said:

My understanding is that bonuses and overtime form part of qualifying earnings - and so the employer’s contribution should include these, no matter who the scheme is with.

My bonuses were always treated as outside of pension calculations (also mostly huge multinationals and four different employers) so I don’t believe that’s the case.

Marcon

El_Torro said:

Time4T_Accounts said:

My understanding is that bonuses and overtime form part of qualifying earnings - and so the employer’s contribution should include these, no matter who the scheme is with.

I don't get paid overtime but my annual bonus does not get any employer pension contributions. My employer (which is a large multinational) could be breaking the law in this, though I doubt it. 

There's considerable flexibility in terms of what an employer can use as the basis for contributions (although in some cases that can impact on the %age contributions to ensure it meets minimum contribution requirements). Good general explanation here: https://www.nestpensions.org.uk/schemeweb/helpcentre/contributions/calculating-contributions/calculate-contributions-using-certification.html

MallyGirl

My bonus always said 'non pensionable' in the description 

Time4T_Accounts

Take a look at paragraphs 36 onwards of this doc from The Pensions Regulator …

https://www.thepensionsregulator.gov.uk/en/document-library/automatic-enrolment-detailed-guidance/4-pension-schemes-under-the-employer-duties#5ef327504793462b895a8c372b3157f9