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How Could Changes to Employee Pensions Affect Your Business?
If your business has employees, then changes
put forward by the government could have a
big impact on your responsibilities and
costs for employee pensions.
Although the changes are still under
consultation, they are likely to form the
basis of future pension law; therefore it
will help you to understand them as soon as
possible!
The planned changes that affect small
businesses include:
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The introduction of a low-cost savings
scheme which employees will
automatically be enrolled in.
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Employers must make matching
contributions while the employee is in
the scheme.
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The contribution rate for businesses
will be fixed, and brought in gradually
over at least 3 years; with the
government considering transitional
support for the smallest businesses.
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The state pension age will gradually be
increased; going to 66 between 2024 and
2026, then to 67 between 2034 and 2036,
then to 68 between 2044 and 2046.
Reaction to most of the changes has been
positive, but many business groups are
worried that the compulsory contributions
are yet another expensive burden on
businesses.
Miles Templeman of the Institute of
Directors (IoD) said: “We strongly oppose
compulsion on employers. It will act as a
tax on employment increasing the price of
labour and reducing demand. There is simply
no economic case for compulsory employer
contributions. The Government cannot
continually offload social problems onto
businesses and expect them to pay.”
These pension changes could have a big
impact on your business, and the sooner you
start to plan for the costs of
contributions; the less significant the
impact is likely to be on your business.
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