Services: Pension Auto-enrolment Qualifying scheme exemption test

With the planned introduction for NEST Pensions (previously known as Personal Accounts or personal account pensions) in 2012, employers will, for the first time, be forced to contribute to their employees pensions. For more comprehensive details and advice on NEST Pensions please visit our main pension auto enrolment dedicated website.

What is clear is that NEST pension schemes are going to impact on corporate pension planning. If you do not currently make employer contributions, you are going to have to, and if you do already make contributions, you will have to review your procedures and make sure they are compliant with the new legislation.

If you have a pension scheme at the moment, it is likely to need to pass a qualifying pension scheme test to confirm that is a uitable alternative to that offered by the Governments NEST pension scheme.

Employers are going to fall into two broad categories; those who pay into a pension plan and want to know how this will impact on them, and those who do not currently offer employees a pension and want to plan for change.

Companies with a pension arrangement

Just because you pay into a pension, does not mean you are exempt from this pension auto-enrolment legislation. Unless your scheme is "good enough" you will need to replace it with an open market pension scheme that is, or use the Nest pension.

Assuming your scheme does pass the wualifying pension scheme test you will still need to gear up for the implementation and on-going administration of a pension aut-enrolment culture. Things you may wish to consider:

• Are company contributions at least 3% of employee earnings (this may be total earnings and not band earnings)?
• Do employees pay at least 4% (5% gross) into the arrangement?
• What are the investment choices, and how are they decided on?
• How will employees opt out of the scheme?

Managing upcoming regulatory changes are what we do for our existing corporate clients. If you would like a pro-active service for your employee benefits, we could do that for you too. You can request our free NEST pensions and pension autoenrolment guide or contact us for a free initial consultation with a pension auto-enrolment specialist advisor.

Employers without existing pension arrangements

If you do not currently make employer contributions into a pension scheme, you will be compelled to do so, depending on the size of your company, sometime between October 2012 and 2016. You may want to plan for this cost and discuss ways to use advisory services to get value from an expense that you will have no choice but to meet.

For example, if you were already thinking of introducing a pension scheme for the purposes of staff recruitment and retention, will the NEST scheme meet your requirements, or will you want to consider a more flexible pension arrangement.

Issues you may consider are:

• Why do you wish to offer a contributory pension scheme, and what you hope to gain from it.
• Do you want professional advice from a financial adviser to help your staff understand the benefits
• What are the charges
• What are the investment options, How many funds etc
• Is on-line access important
• What admin can you cope with in-house, what would you prefer to outsource.

It may be that as a result of these issues, you decide that you would like to implement a non NEST pension scheme to address your auto-enrolment obligations.

This situation is fluid, and is likely to change between now and when the policy is finally implements. Please visit our specialist website at www.autoenrolment.info for more information, or follow us on Twitter for updates on the situation.