Auto Enrolment and Pensions
The Government has introduced auto enrolment to help more people save for their future. This means that employers will need to automatically enrol some workers into a workplace pension plan and give other workers the option to join. We want to help you understand and prepare for the changes you’ll have to make. Fines for non-compliance can have a crippling effect on business, potentially running into £000’s.
Pensions might seem complicated but the basic idea is a simple one. It’s worth understanding their benefits, as your State Pension (c£8,000 per annum if you have full entitlement) while providing a foundation, may not be enough to live on, if not, you need to save more.
More than half of people in the UK either aren’t saving at all for their retirement or they aren’t saving nearly enough to give them the standard of living they hope for when they retire. Jon Montgomery of Cobra is supporting Shire to help their many veterinary customers.
If you fall into this category, you have three choices.
- Retire later on
- Start saving more
- Adjust downwards your expectations of what you’ll be able to afford in retirement
Pensions have a number of important advantages that will make your savings grow more rapidly than might otherwise be the case. A pension is basically a long-term savings plan with added tax relief.
Following the changes in pension rules that came into force in April 2015 there has never been more need to review existing policies.
Historically, in a worst case scenario, if you were unfortunate enough to die before spending your pension benefits, your beneficiaries could have faced a tax bill of up to 82% of your fund value. Following the rule changes you have the potential for benefits to be passed on tax free to beneficiaries of your choice.
It is not law that all historic plans have to adapt the new rules and so it could be the case that your policy would not allow you to benefit from all of the new benefits. A simple review could determine what you can and can’t do.
- Starting a pension sooner than later makes a massive difference
- All policies should be reviewed regularly not just in relation to the above but also to check charges are reasonable, investments are in line with your views on risk and performing as they should be
- A pension is one of the most tax efficient ways of taking money out of your business
- Commercial property can be held within a pension meaning business owners could buy the premises and the company would then pay a commercial rent into their pension
- From an inheritance tax planning point of view there is no better place than a pension plan – provided it is set up in the right way