Pension reform - key considerations
Pension reform is possibly the biggest change to company pensions ever
From their staging date, all employers will have a legal duty to offer a qualifying workplace pension scheme (QWPS) to their people. Employers will need to automatically enrol eligible employees into the QWPS and will also need to make pension payments for them.
The staging date depends on the company’s size and employees’ eligibility depends on age and earnings.
For more information on staging dates, minimum pension payments and the earnings threshold, see New employer pension duties – Completing the jigsaw.
Five key things to think about
It’s essential that employers prepare for their staging date as early as possible. To help with this, we have identified five key areas that need to be considered:
Cost of pension reform
Employers will need to understand the cost of pension reform as it's likely that pension costs will increase due to a larger number of employees being enrolled into the company pension scheme.
Use our cost calculator to model different pension costs taking into account eligibility, pensionable salary, potential payment rates and opt out / opt in rates.
This calculator will also give you an indication of what the cost savings could be if you use salary exchange.
Scheme design
Employers will need to redesign their internal processes to ensure that they can meet their new pension reform duties.
Use our pathfinder tool to find out about these new responsibilities and model different scenarios to understand how some duties can be delayed to suit the business needs. The output is a personalised timeline of what needs to happen when.
Also, see our Pension reform - Checklist for employers.
Eligibility
Employers must determine the eligibility status of employees each pay reference period. This status will drive what action should be taken for each employee, such as auto-enrolment or communicating their options to them.
Our eligibility assessment tool delivers clear instructions of what actions need to be taken for each employee. It's ready to be used by employers once they have decided to use Standard Life as their QWPS and it's accessed through our secure platform GroupPensionzone.
Regulatory communications
As part of the new duties, all employers are obliged to tell their employees how auto-enrolment will affect them.
We've created an interactive communications guide that will take you through some of the key things to think about when choosing a communication strategy. This links straight through to specific timelines and letter templates to give a clear picture of what should be communicated, when.
These documents reflect Standard Life's interpretation of the legislation and are for guidance only. Employers are responsible for ensuring that they communicate all the necessary information to meet the requirements under the Pensions Act 2008. If there is anything you're unsure about we recommend you speak to your corporate adviser.
Joining
Auto-enrolment isn't the only way to comply with the new pension rules - many employers are using contract of employment. For more information on joining please see our pension reform FAQs for employers and Pension reform- Checklist for employers.
Our pension reform solutions
The pension reform changes have implications for every employer in the UK. Standard Life's solutions can help employers of all types and sizes.
Streamlined solution is simple to set up, easy to manage, effective - it's suitable for the majority of organisations.
Lifelens is our integrated solution is designed for companies with specialist needs.
For more information, you should speak to your corporate adviser. If you don't have a corporate adviser, contact us.
Pension reform
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The information on this site is for financial planning professionals, pension trustees and individuals responsible for decision-making on corporate schemes, and must not be relied on by anyone else. If you are not an adviser you should go to our main website for information about our products and services.
