The latest Clay Shaw Butler Money Matters column from the Carmarthenshire Herald

The latest Clay Shaw Butler Money Matters column from the Carmarthenshire Herald.
By Mark Jones, director of Carmarthen-based Clay Shaw Butler chartered accountants and business consultants.

In Money Matters last week, we started to put the spotlight on changes to pension schemes.
Many of you have written to us explaining that you don’t understand the phrase ‘pensions auto enrolment’.
So, this column will attempt to explain what is going on.
The Government is placing greater responsibility and sometimes higher costs on employers.
Employers are/will be required to provide access to pension provision for their employees.
What is a qualifying automatic enrolment pension scheme?
Employers are able to comply with their new obligations by using an existing qualifying pension scheme, setting up a new scheme or using the government low cost scheme - the National Employment Savings Trust (NEST).
It is important that the pension scheme chosen will deliver good outcomes for the employee's retirement savings.
This may mean that an existing employer's scheme may not be appropriate as it may have been designed for the needs of higher paid and more senior employees.
This may mean that NEST for example may be an appropriate scheme for employees who are not currently entitled to be a member of an existing employer scheme.
To be a qualifying automatic enrolment scheme, a scheme must meet the qualifying criteria and the automatic enrolment criteria.
The main part of the qualifying criteria requires the pension scheme to meet certain minimum standards, which differ according to the type of pension scheme.
Most employers will want to offer a defined contribution pension scheme.
The minimum requirements for such schemes are a minimum total contribution based on qualifying earnings, of which a specified amount must come from the employer.
To be an automatic enrolment scheme, the scheme must not contain any provisions that:

• prevent the employer from making the required arrangements to automatically enrol, opt in or re-enrol a 'jobholder' 
• require the jobholder to express a choice in relation to any matter, or to provide any information, in order to remain an active member of the pension scheme. 

The second point above means, for example, that the pension scheme has a default fund into which the pension contributions attributable to the jobholder will be invested.
The jobholder should however have a choice of other funds if they want.
If you are an employer in West Wales we, at Clay Shaw Butler, can provide help and advice regarding your auto-enrolment responsibilities and can guide you through the process.
When does automatic enrolment apply to an employer?
The law came into force for very large employers on 1 October 2012 but, fortunately, the automatic enrolment rules have a staggered implementation by reference to the number of employees.
An employer can precisely work out when the automatic enrolment rules will have to be applied as the implementation date (known as the 'staging date') is set by reference to the number of persons in an employer's PAYE scheme on 1 April 2012.
The more employees an employer has on that date, the earlier the staging date.
Examples of staging dates

• If you have 250 employees, then the staging date was February 2014. 
• If you have 62 employees, the staging date was July 2014. 
• If you have 50 employees, then April 2015 was the staging date. 

For those with less than 50 employees the earliest start date was 1 June 2015 but the precise date will depend not only on the actual number of employees on 1 April 2012 but also an employer's PAYE reference number.
The earliest date for an employer with up to 30 employees on 1 April 2012 is 1 June 2015 and the latest date is 1 April 2017.
Importantly, it doesn't matter how many employees an employer has on the staging date - there may be considerably more (or less) than on the 1 April.
So if you are an employer, look at the number of employees you had on the 1 April to know where you stand.
Please contact us at Clay Shaw Butler if you are unsure of how to assess the types of workers you have.
The Money Matters column will explain more about auto enrolment next week.

You can find out more about money matters on the Clay Shaw Butler website (under our news for business section) -
http://www.clayshawbutler.com/news/latest-news-for-business
We have a strong and experienced team with great local knowledge all geared-up to helping you get the very best from your finances – whether that is as an individual or as a business.
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