Friday, 12 June 2015

Pensions Grief for Micro Employers

Happy Pensioners
I expect many large IP practices have their own pension schemes for employees these days. I have never benefited from a workplace pension with any of my previous employers, but now, as the smallest employer possible, I am required to start a pension scheme for my staff. Its a great idea in principle and the government is right to encourage pension saving.

Maybe some of you too have been notified of your staging date. Its  all the work of The PENSIONS REGULATOR. Apparently its not a scam. Just like parents who employ nannies, patent and trademark agent employers are now required to set up a scheme so that after the staging date (not before) you can write elaborate letters to all your staff - including yourself if you employ yourself, as I do, telling them all about their automatic enrolment in the glossy new firm pension scheme and how their pay cheque will be reduced.  Maybe they will all opt out,  but its a crime to presume that. A scheme must exist even if it never receives a penny.

I asked my personal pension provider. Like many in the industry it was SO not interested. Well who can blame it. The chances are no funds would flow in or very modest ones for which the charges would swamp any possible returns. This is just a fact of life. For those with only pennies to invest a piggy bank is best.

There are at present (only) 47 companies offering schemes. They are on a register here. It includes some that are closed for new business and many with restrictions.

It seems that some professions have offered their members schemes to help. Not heard anything though from The IET, the SRA, ITMA or CIPA, but perhaps I have missed it. The only one I could find offering help on the Internet was the BMA. Good to know your GP's pension is sorted!

In any event, it seems the only practicable scheme is the one run by the Government. Its called NEST not to be confused with NESTA the once government owned innovation body that may be more familiar to those in our industry.

You might think there is a little irony or at least some wasteful administrative circularity in replacing part of the state pension scheme with another state pension scheme. I do.

The reason why professional bodies were encouraged to help was that they might have the membership clout to set up communal schemes to which small members could sign up even if their staff were more likely than not to opt out, either because they are so poorly paid any reduction from their wages is untenable, or because they have independent arrangements and would in effect be paying the employer's contribution from their own pockets. Does  CIPA already run a stakeholder scheme for its own staff - can we piggy back on it?


  1. What are the risks, for a single employer company, in just ignoring it and hoping it goes away? Is there an audit of this done, do you know?

  2. Our local insurance broker cum pension broker is offering us either an advisory service on the new rules or a "low cost option". The latter involves fees of £2500 plus VAT!

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  3. Well just hope that the UK doesn't go the same way as France - from January 1st, 2016, ALL private employers (i.e. non-state), irrespective of their size, have to provide a complementary health insurance for their staff with a minimum set of guarantees and coverage ("panier minimum"). No opt outs for staff (or only in exceptional cases) either. Whilst this is probably a boon for most employees in small firms, as virtually none I have ever encountered had such a system, it does mean that their wage packet will go down as a result, and there is the obligatory added formalism that the employer has to go through. So much for the "choc de simplification" !