Taking Control of your Retirement
We have started to get enquiries from members of staff of companies who are setting up Auto-Enrolment pension schemes. In general, we can summarise the questions as “Is it true we have to join a pension scheme?” and “Do we have to put money in?”.
The answers, in all fairness, are “Yes!” and “Yes!”, but you can opt out in the period immediately after you have been auto-enrolled. You have no more than a month after you have been opted in to opt out, so make a decision quickly and make SURE you send in the right notice.
Before you send in the opt-out notice, please have a careful think about how you are going to fund your retirement. If you don’t save for your retirement you will get the basic state provision and nothing else. No politician is promising much in the way of an increase in real terms for the State Pension, so doing nothing now is NOT going to help you in 10-20-30-40 years’ time. The employer contribution, especially in the early stages, is not huge, but much better than nothing.
As for employers, DON’T get involved in a discussion whether someone should opt in or out. DO NOT go there as you are setting yourself up for all kinds of trouble with the Pension Regulator, the Financial Conduct Authority, Uncle Tom Cobleigh and all! At worst, it could lead to fines and even imprisonment, so stick to the statutory communications.
For employers there are some uncomfortable decisions to be made, with the key one being “ Do you want to do the minimum or do you want to look good?”. There are some good, sound business reasons to have a company pension scheme, but they only kick in if the employees are aware and appreciate what is being done on their behalf. My view is you are going to have to do something and doing it badly will cost you as much, if not more, than doing it well, so you might as well make the best of it.
Key to all the above is start early. The Pension Regulator say on their website:-
“Allow plenty of time to prepare for automatic enrolment. We recommend starting 12-18 months before your staging date, though this will vary depending on your individual circumstances – not all employers will need to allow so much time.”
Some providers are already saying they will not offer terms for schemes with less than 6 months to their staging dates, as they are worried by the reputational damage if it all goes wrong. For companies with 50-150 employees it is starting to get a bit tight/too late!
Talk to us, quickly; you might not like our answers, but they will be honest and prompt; today you can go elsewhere!
Contact me with queries
If anyone is looking for general advice, then please write in to the blog and I would be happy to help with anonymous advice posted here. Alternatively, please call us on 0116 253 5600 and ask to speak to an IFA, (Independent Financial Adviser), for a no-obligation discussion.
If you know you need formal advice, have a look at http://bankfield.net/personal/retirement-planning/ or ask around for a recommendation, it might even be me.