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Pension Changes
With the recent implementation of Pensions Act 2008, there are important changes ahead of which employers should be aware.
With staffing costs being one of the key costs for care providers, these changes are unfortunately only going to add to outgoings in this area.
From October 2012, all employers will be required to enrol all eligible workers in a
suitable pension scheme and make contributions on their behalf.
Eligible workers are those aged between 22 and 65 and who earn over £5,035 per annum.
The concept is that employees who do not opt-out (and the onus is on them to optout and there should be no encouragement by employers for them to opt-out) will have to contribute 4% as an
employee contribution.
Employers will have to contribute 4% (initially 1% in October 2012, rising 1% each year until the rate of 4% is reached). Contributions will attract 1% tax relief at source and are to be made on the excess over £5,035. Therefore, somebody earning the upper limit (£33,500) will cost an additional £855 per annum in pension contributions.
This will result in a significant extra cost of employment and is something to be mindful of in budgeting for the future.
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