New Rules for Pension Plans in the United Kingdom
Aviva manages retirement benefits throughout the UK and is, actually, the largest insurance services provider in the United Kingdom. As of 2012, Aviva provides over 53 million customers worldwide with investment services including insurance and savings products. With extensive experience managing pension plans, Aviva is typically abreast of the most recent requirements.
The government of the United Kingdom has unvieled new legislation to reform pension plans. These reforms will affect all employers doing business throughout the UK. Among these reforms are a new requirement to automatically enroll new employees in an employer’s pension plan, and another requirement mandating employer contributions to employee pensions. Another part of the new legislation is the introduction of the National Employment Savings Trust, or “NEST”, as it is known.
Employers throughout the UK must familiarize themselves with the new rules, which are scheduled to take effect beginning on October, 1, 2012. They must therefore be informed as to how this new legislation will effect them and their employees. Several of the particulars are provided in this article. To learn more, check out the website with information for employers at http://www.aviva.co.uk/auto-enrolment.
The government has cited several reasons for the need to reform pensions. Life expectancy is increasing – meaning that people will live longer in retirement. Therefore they will also require a larger retirement savings to last them longer. Also, government may not be in a position to afford to keep state pensions at their current level over the long run. This means there’s considerable need to encourage people to save for their retirement. In this regard, a staggering seven million people throughout the UK have inadequate retirement savings, and some are not saving at all.
Some employers have discretion to implement the new pension reforms. For example, employers with at least 100,000 employees can begin auto-enrollment starting July 1, 2012. In general, beginning October 2012, employers doing business in the UK will have to enroll their employees into a qualifying pension plan and who are 22 or more years old; who earn more than the minimum wage; and who are not currently in a qualifying pension plan. Qualifying plans must have a minimum amount of contribution into the plan. Employers wishing to know how much they must contribute to their plans can find out at: http://www.aviva.co.uk/auto-enrolment. A qualifying plan could be either an occupational pension plan, a personal pension plan or National Employment Savings Trust.
After deciding the type of plan to maintain, the employer must register the qualifying plan with the Pensions Regulator. Employers having an existing Aviva plan could alternately have Aviva contact the Regulator and provide the required information. Employers must inform existing pension plan members that they are already in a qualifying plan, so these employees will know they are covered. Employers must also inform other eligible employees they will automatically be enrolled in plan unless they join it before automatic enrollment date, and that they have the right to opt out. Employers who don’t comply with the pensions reform requirements could be fined. For help with pension and insurance services in the UK, go to http://www.aviva.co.uk/auto-enrolment . Aviva can assist you to set up and manage an auto-enrollment pension plan that meets the new requirements for you and also safeguards your employees.