With new legislation on pensions, Acumen Employee Benefits’ consultant Ann Lawson highlights the key areas that employers need to focus on now.
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It been quite a month following all the announcements in the Budget regarding pensions, with lots of press coverage around the Life Time Allowance (LTA) changes. But there’s a lot more that requires attention from an employer’s perspective.
The focus to date has been on how these changes affect individuals, but how do these changes impact employers?
Whilst the devil is in the detail, the question being posed is what advice are you receiving on the impact of this legislative change for your company and what do you need to do for your employees whom it affects?
So why are these changes a concern for employers and why do you need to keep an eye on Automatic Enrolment Compliance?
Pension changes: key focus areas for employers
At a holistic level, there are a number of key areas to focus on and it is not recommended to look at the recent Budget announcements in isolation.
The removal of LTA charges and ultimately the LTA, will likely mean that “Excepted Life” Group Life Assurance arrangements may no longer be required, and as a consequence could expose the business to an unnecessary tax charge. This one is a relatively easy issue to address, but care is required regarding the Trust aspects.
Next, there’s also an increase in how much someone can save into pension with increases to the Annual Allowance from £40,000 to £60,000, plus the Money Purchase Annual Allowance and Tapered Annual Allowance also increasing from £4,000 to £10,000.
And lastly, there’s changes to the adjusted income for Tapered Annual Allowance from £240,000 to £260,000.
Pension changes: what employers must do
Considering these together, the main issue for HR teams is to review your high earner policy, whether formally or informally adopted, and how it interacts with all the relevant legislation – all whilst remaining compliant with Automatic Enrolment.
These adjustments may no longer be required, and at a minimum, will need to be reviewed to ensure you remain compliant with your Automatic Enrolment (AE) certification and legislative requirements.
As ever, it’s never straightforward when it comes to pension and tax. Those employees affected by these changes are likely to have questions and expectations – what additional information you can provide and what it means for them, along with any changes in policy.
Pension changes: seeking expert advice
The question is, are you prepared, and can you deliver?
If in doubt it is best to seek expert advice. At Acumen Employee Benefits, we are offering complimentary employee engagement presentations to affected High Earners, available online or face-to-face. These sessions are fully tailored around employers benefit provision, making it bespoke and relevant to your team delivered by our highly qualified Employee Benefit and Personal Financial Planning Advisers in our sister company Acumen Financial planning.
To book an Employee Engagement Session or to discuss how we can help you navigate the new pension changes, contact us on info@acumeneb.com or 01224 001946. You can also log on to Acumen’s website.
