Nest and Auto Enrolment How will it impact your business? Chris Daems Dip PFS Principal Financial Solutions

What is NEST and when is it going to happen? Nest is the new government established state pension scheme. Most employers and employees will need to contribute and will be “Auto Enrolled”. It impacts most employees (if they earn over £7,475) and all employers. The minimum timescale for employment is 13 weeks The liability and responsibilities rests solely with the employer The pension scheme will start to impact employers and employees from 2012 Contributions into the scheme will be 8% between £ £38,185 with at least 3% must be from the employer. Employers can choose to make their own provision or take the NEST scheme

New pension rules – Who will it impact? The new rules impact every business who employs PAYE individuals including:- - Private companies - Charities - Companies with existing schemes who do not meet new contribution levels. It will not impact:- - Businesses who already have a scheme which meets the minimum level of contributions (3% for employer and 4% for employee). - Sole Traders who do not employ.

Is NEST going to happen? Really? NEST has already been established in Law in the Pensions Act Consumer Spending Review and the Latest budget confirmed that the new pension rules will continue to apply Longer Term it makes fiscal sense for the government – takes the responsibility away from the State scheme and gives the responsibility to the Employer and Employee to manage. Therefore it’s going to happen.....and employers need to be aware, plan and prepare for these rules. Be aware of the IR35 rules – employed or self employed?

NEST – have I got a choice? NEST is the “default” option:- - Designed for low earners - Will have a limited fund choice – all low risk - Can’t transfer funds in our out - No access to advice However, employers can decide to set up their own scheme:- - Access to advice for Employers and Employees - A wider range of fund options for employees - A choice of providers – the whole of the market is available - The opportunity to transfer funds from one scheme to another - A more comprehensive service from both Adviser and Provider - An employer setting up their own scheme will “opt out” of NEST

NEST – Timescales The larger companies are being dealt with first. Then moving down through dependent on business size. You can find out when you and your clients businesses specifically be impacted by looking at the businesses PAYE ref number – available on request. Employees can “opt out” but will be “opted in” every 3 years and on joining a new employer. Also, employers cannot influence or persuade employees to do so. If this is found, heavy legal penalties (fines and/or imprisonment) will apply. For small employers (under 50 people) these fines will be up to £500 per day. Under the NEST scheme the responsibility for administration will be with the Employer.

Why Take Advice Now Allows contributions to be planned for as part of the business as well as utilising future pay rises to allow for this budget. Changes in the IFA world mean that that after 2012 the advice population with more businesses looking to get ready for the NEST rules. If you leave it too long, the may not be sufficient time to organise an alternative scheme and therefore the business will be forced to go down the NEST route. By planning for the changes now, it provides an opportunity to package the changes as a benefit for your employees. However if they are “forced” to do it in a couple of years time, the employee perception is different.

Thanks for listening Any Questions? Mr Chris Daems Dip PFS. Principal Financial Solutions, 51 Moorgate, London, EC2R 6PB. Contact Details Mobile : Office :