Michael Lansdell says: Help your team understand the benefits of workplace pensions
Auto-enrolment for workplace pensions began rolling out in 2012 and all dental practice owners should know their obligations. The duties are ongoing and rely on good record keeping and remaining abreast of changes to the law.
In April, the contribution rates went up. The employer minimum contribution for 2018/19 is now 2%, the employee contribution, 3%. However, an employee may not need to contribute at all if the minimum payment is met or exceeded by their employer (there may be different rules specific to the scheme you have, so always check). This makes the total minimum contribution 5%. The earnings band was also changed in April, so it’s now £6,032 to £46,350.
In 2019/20, the rates are set to change again. From April 2019, the employer minimum contribution will be 3%, employee contribution 5% (again, different rules may apply). The new earnings band is still to be confirmed.
Employees may be worried that these increases are wiping out any gains from the 2018/19 tax changes. An employee may be saving on income tax because of the increase in the personal allowance, and in national insurance contributions (NICs) because of the increased thresholds. But because their net pension contributions are increasing, they will see a fall in their monthly income.
However, most of us aren’t saving enough for a comfortable retirement. A total contribution rate of 5% does not really represent a significant amount either.
The government plans to incentivise employees to save more. So, don’t delay with speaking to a specialist accountant, such as the experts at Lansdell & Rose, who can provide practical advice based on up-to-date knowledge and experience. With the right support, not only can you help your employees to save more, but you can help prepare yourself for a comfortable future, too.
The pensions habit is one that we must endeavour to get into as early as possible, so investments have longer to grow. Being able to accurately assess your workforce for auto-enrolment and support them in making good decisions to save more is a highly attractive quality for any employer who wants to recruit great staff and retain a happy team. Pension contributions shouldn’t feel like a cost. Any short-term loss should be instead seen as investing in a secure retirement.
To find out more, call Lansdell & Rose on 020 7376 9333
Or visit www.lansdellrose.co.uk