Many business owners are still blissfully unaware of the impact that Personal Accounts will have on their business. In addition to these reforms having severe administration issues, they will increase the cost of your payroll between £150 and £1,000 per employee per annum.
Initially launched as a White Paper in 2006 personal accounts is a means for individuals to save for their own pensions. In November 2008 the provisions were enacted in the Pensions Act 2008.
We are occasionally asked about personal accounts but are constantly mystified that this major piece of legislation has gone largely unnoticed by UK businesses. The key provisions of the act mean that, as an employer from 2012 you will be required to
- auto-enrol all employees over 22 years of age and earning £5,035pa or more into a qualifying workplace pension scheme.
- provide information to your eligible employees but you cannot give advice.
- collect the contributions from the employee's salary and make the employer contribution on a daily basis from the point of enrolment.
- Your employee can opt out of the qualifying workplace pension scheme within 30 days of being enrolled. You will be responsible for ensuring this opt out takes place and refunding any money which has been deducted.
- If your employee decides to stay in the qualifying workplace pension scheme you will be required to pay 3% of all earnings between £5,035 and £33,500.
- If your employee opts out of the scheme you are responsible for auto-enrolling them again exactly 3 years after the date they first became eligible to join.
If you need any information on how personal accounts will work the Personal Accounts Delivery Authority have released a useful Personal Accounts Key Facts.
Or if you are a Dataplan customer you can contact us for an impact assessment on your business.