Would you give your pension fund or advise your employees to give their pension fund to a man you have just met?

You and your employees would have seen the Financial Conduct Authority (FCA) and The Pensions Regulators (TPR) advert telling you not to let scammers enjoy your pension savings.  They have joined forces on the campaign to raise awareness of the common tactics used by fraudsters.

The introduction of ‘Pension Freedoms’ in 2015 gave people greater access to their pensions by allowing new flexibilities with regards to how those over age 55 can take their benefits.  Whilst this was widely welcomed and subsequently used, sadly, the same change in rules also presented opportunities for criminal gangs to defraud savers of their lifetime retirement savings.

With confusion in the minds of some people about what flexibility rules mean, this has created a grey area that scammers like to exploit and prey on people’s lack of knowledge in this area. Very rarely are pension funds recovered if they have been scammed, leaving people reliant on the State Pension.

Scamming is a big issue and is being taken very seriously.  The Commons Select Committee announced last week that it is to examine the impact of Pension Freedoms and the protection of pension savers.  The FCA and TPR stated that in 2018, 180 people reported to Action Fraud that they had been the victim of a pension scam, losing on average £82,000 each. More alarmingly, they believe that only a minority of pension scams are ever reported.

So has Scamming been on the increase during Covid 19?

The Department of Work & Pensions (DWP) publication “DWP’s response to the coronavirus outbreak2 recognises that people facing financial hardship may also be looking at their pension savings as an extra form of support. It is important that these savers are protected from decisions not in their best interests and do not see their savings fall into the hands of opportunistic scammers.

How Employers can help?

Employer can have a big part to play in preventing their employees being scammed.  This is particularly the case given that employees so often look to their employer for initial guidance in such matters.

Employers can help raise awareness of this criminal activity by display an FCA/TPR ScamSmart poster in workplaces to raise awareness of the issues and include reminders of the risks in their regular Employee Benefits updates.  Employers can also signpost employees to generic  impartial guidance via the government funded service, Pension Wise.

In addition, we would strongly encourage Employers to provide employees with more access to group pension surgeries and/or targeted sessions on pension retirement options via remote webinars and video calls during the on-going crisis.

For more information the above topic, please speak to your usual Wingate Consultant or contact us via info@wingatebs.com or on (T)01883 332260.

Employee Benefit Review Service

Please watch the video to find out in less than 2 minutes how our Employee Benefit Review could help your business

Although Workplace Pensions have dominated the world of employee benefits over the last 5 years, employers are still encouraged to regularly review and refresh their benefits package to ensure the offering remains both attractive and relevant to employees. So how can benefits be delivered in the most positive way, whilst also avoiding the common mistakes that cause badly managed promotions?

There are a number of different areas to consider for any company reviewing its employee benefits package, whether this is in relation to existing benefits in place, or introducing a new arrangement; some of these are listed below.

Suitability

The demographics of your business could be heavily weighted in a certain area, meaning some benefits may be appreciated more than others.  For example, younger employees may prefer a Health Cash Plan compared to older employees, who may prefer full Private Medical Insurance. Higher earners might want to maximise pension contributions to take advantage of tax savings, whilst those with young families may prioritise Life Assurance or Income Protection. Employee Surveys will tell you what is important to your staff which will ensure that the cost of a new benefit is going to be highly valued by the staff.

Timing

When you have decided what to provide, timing the introduction well is essential. It’s key to avoid periods when high numbers of employees are on leave (e.g. summer holidays/Christmas) and/or when business pressures mean your workforce is unlikely to acknowledge the impact. It is also best to avoid clashes with other business changes, when the positive introduction of a new benefit could be overlooked. So carefully consider when is the best time to announce any changes, to achieve maximum positive engagement from your employees.

Delivery

You must ensure that communications are managed properly and work well to support your key message and the smooth running of the improved benefits package. Whether this is done via letter, benefit guides, e-mail or intranet, any new systems introduced should be made completely clear so your staff understand what is being made available. Employee benefits form part of the remuneration package offered so make sure your employees know when they are getting something extra!

Support

Whether managed by you as the employer, the policy insurer/provider, or your outsourced employee benefit consultant, once in place the new benefit should be clearly promoted and communicated to employees. Training for managers is advisable so they fully understand the benefits on offer and can explain them positively. It’s essential that employees know who they can speak to if they have any queries, or require any assistance, when using this new benefit to ensure it’s effectiveness.

Reviews

Your new employee benefit may be suitable, introduced at the right time and include expert delivery and support – but will it always do what you set out to achieve? Considering your workforce may change, or even forget what is available or how to use it, we recommend employers:

  1. Undertake annual reviews to ensure the benefit remains relevant and cost effective in the market
  2. Provide regular updates and notifications to staff to keep everyone engaged
  3. Ensure the benefit continues to be valued by your staff usually best achieved via employee surveys or review meetings

 

Unless they are contractual there is nothing stopping employer replacing one employee benefit with another for any number of reasons – you just need to consider what is in the best interests’ of your workforce before doing so.

If you are considering providing a new employee benefit or restructure of existing benefits and would like further information on how we can help ensure a successful implementation please contact the team on 01883 332260.

Jon is one of our team of Employee Benefit Advisers.

“So, I have our company pension in place for the employees; contributions are being taken from pay and paid across to our pension provider on time and we have submitted our declaration of compliance to The Pensions Regulator (TPR). All seems to be swimming along lovely and I can now go back to focusing on my business and helping it to make profit.” As a key decision maker or owner of a business, these words may ring very true to you.

With your personal affairs, how often do you review your utility bills, satellite or cable TV contract or mobile phone contract? Personally, I probably look at mine every 2 or so years. I do it just to make sure that I am doing the right thing, that I’m not over paying and that the service I was promised two or so years ago is still the same today. If this is how we deal with our personal affairs, as a business owner, why don’t we do the same with such things as the company’s pension scheme or come to that matter any of the employee benefits? If its the general insurance, property rates or IT or phone systems, they’ll usually be reviewed annually so why not the same for the pension and other benefits?

Pension legislation as well as payroll software and pension systems are all very different now to how they were back in 2012 when Automatic Enrolment Preview (opens in a new window)started and is even more different in the last two years. However, has your company pension been amended/reviewed to keep up to date with these changes in legislation?

Questions such as the following should all be asked

  • How is the default investment fund performing, and what are you measuring it against?
  • Is the Annual Management Charge competitive?
  • Does my employees’ pension target drawdown or annuity?
  • Does my payroll provider have a direct link with my pension provider to simplify payroll processes?
  • Do my employees value the pension?
  • Can I help them with pension education?

Many people will comment that ‘if it ain’t broke’ don’t fix it’, however, if the pension doesn’t perform as it should and/or employees aren’t receiving value for money who do you think your employees would go to for answers?’

The scrutiny from TPR over the coming years on Workplace Pension is only going to intensify over the next few years and therefore it is important that a business has steps in place to defend itself and justify the decisions made to TPR if asked.  A review of your Workplace Pension will either confirm that what you’ve done is still good today or highlight areas of improvement.

Either way, this is a positive message that can be sent to staff to re-assure them that you have everything under control and that they can continue to drive the business forward on your behalf.

For further information on our scheme suitability review services please contact the team on 01883 332260.

 

Richard is one of our Strategic Benefit Consultants specialising in Workplace Pensions.

When the Workplace Pension Reforms were first introduced, minimum pension contributions were set that an employer had to pay to their Workplace Pension Scheme, increasing over time.  Whilst Auto Enrolment has been the norm for some time now, it’s amazing to think that we have only just reached the first increase in contributions, from 2% to 5% total, effective from April 2018.

Many firms are paying more (and in some cases, much more) than the legal requirements – but what is the benefit of doing this?

The minimum is just that……….it’s not enough!

There is a wide understanding that minimum contribution level of 8% from April 2019 will not provide someone with a sufficient pension in retirement to live on comfortably. Research by the Pensions Policy Institute (PPI) suggests that a total pension contribution of 12% is more realistic and even the Department of Work & Pensions (DWP) own review in 2017 stated: “We recognise contributions of 8% are unlikely to give all individuals the retirement to which they aspire”.

This suggests employees should be paying upwards of 10% of their salary into a pension, which gives employers an opportunity to demonstrate they are prepared to make a long-term investment in their employees by paying more to their pension. Offering higher pension contributions shows a commitment to help employees secure their financial status in the longer term….it’s in effect ‘deferred pay’.  Given the amount of publicity pensions have received in recent years and the fact everyone is aware every employer must pay a legislated minimum contribution paying more than the minimum has become a very distinguishable ‘added value’ benefit which can help attract and retain staff.

The cost to increase contributions for all employees may be too high

Of course, paying higher pension contributions for all employees will not viable for every employer but there are ways of restricting increases to certain categories of employees. For example it could be used to reward employees who achieve a certain position within the business, a level of qualification /compliance or a favourite of ours, loyalty.

Another option is to match higher employee contributions up to a certain point, so rather than providing an increase for everyone, an employer only pays more into the pension when employees do.  This sees employers providing additional value to employees who place importance on their pension themselves, therefore maximising the benefit of the additional spend.  Employers could match the increased levels to clear (non subjective we’d suggest) company values or targets as long as these of course do not discriminate.

Add ‘value’ without significant cost

Employee guidance, education and support can be provided without significant increases in cost. Pensions are rarely seen as being easy to navigate, so providing information they can understand will ensure workers feel included, engaged and ultimately value their pension contribution benefit. If they don’t understand it they are unlikely to value it and certainly not to the extent the employer would want bearing in mind the cost.  Employees highly value guidance which they can understand and act upon around their investment choice, retirement options, required levels of savings etc. At the same time they rarely have the time to source let alone educate themselves on a subject they see as complicated to start with. For this reason simple, short one to one human assistance can provide a huge benefit at a low time or financial cost.

 

Whichever way you look at it, pensions have been brought back to the forefront of many employees minds when it comes to considering benefit packages. This is only likely to intensify with the increases to auto enrolment pension contributions this and next year and the ever increasing realisation that the State Pension is unlikely to provide what people had hoped and certainly not when they’d originally expected it. As such anything an employer can do to increase the value of its pension benefit will be recognised and valued more so than it likely would have been in the recent past.

 

 

Jon is one of our benefit advisers and can be contacted at jon.bird@wingatebs.com or 01883 332269. Alternatively please contact any of our Employee Benefits Team at 01883 332260 or info@wingatebs.com

 

The Employee Benefit world is always changing.  What changes lay ahead and what do you have to do?

Pension Automatic Enrolment 

Increases to statutory minimums Automatic Enrolment seems to have been a success.  A report* by the Department of Work and Pension states that over 9 million people have been enrolled into a work place pension and with only 1 in 10 opting out.

However, the next success needs to be people saving more towards their pensions.  This will happen in April when minimum pension contributions increase. This will have an impact on most employees take home pay.

Early communication with employees is vital to ensure your employees understand this is happening and you must make these increases to remain compliant with The Pensions Regulator.

*Automatic Enrolment Review 2017: Maintaining the Momentum (DWP)

Government to end Fit for Work assessment service

Fit for Work is a Government funded scheme where employers could refer employees for free occupational health assessments once they had reached four weeks continuous sickness absence.

This Government funded scheme is being withdrawn on the 31st March 2018.  This could leave some employers without any fall back option to assess illness or injury of their employees and with no credible return to work plan.

We would recommend that employers who have used this scheme review their private provision of return to work assessments.  Appropriate action should be taken to review your current employee benefits by looking at early intervention services included in your existing Group Income Protection Policy, EAP and/or your Occupational Health provision.  Alternatively, should you not have these benefits, implementing these facilities so your business has a clear plan on how to deal with absence and return to work plans.

Childcare Vouchers

Childcare Voucher are a means for employed parents to reduce their childcare cost.  By using salary exchange to purchase vouchers through you Childcare Voucher scheme, employees save significant amounts of tax and national insurance on the value of the voucher.

We now have a date when the Government are going to phase out Childcare Vouchers and replace them with Tax Free Childcare.  Whilst Tax Free Childcare is open to a wider range of parents, e.g. the self-employed, it may not be as beneficial to your employees as the current scheme.

If your employees are already in the Voucher scheme, they can retain the right to remain in the scheme.  Employees who still want to partake in the Voucher scheme must have a deduction made from salary in the March pay period to qualify.  After this date, no new employees are able to join the Voucher Scheme.

Again, early communication with employees is vital to give employees time to consider the two options and allow time for employees to join your voucher scheme by March payroll cut off.

 

With these changes happening from April there is a lot for employers to consider and communicate to their employees. Reviewing current practices and employee benefits then communicating to staff is vital in keeping your work force both informed and engaged. 

We can provide a free no obligation review of your current practices and benefits. For details please contact us on 01883 332260 or at info@wingatebs.com

What is salary sacrifice?

Many employers give staff the option to swap a part of their wage in return for a non-cash benefit. As a result of having a lower salary, employees pay less income tax and make lower National Insurance contributions. Likewise, employers save on National Insurance as this is linked to salary.

Why is salary sacrifice under threat?

The more non cash benefits provided via salary sacrifice arrangements the less tax is collected by HMRC. The extent of this lost tax is very difficult to track because firms don’t have to report exactly how much tax they and their employees save but the changes are expected to result in £1bn of additional HMRC revenue over 6 years.

Which benefits are to be cut and which are to be protected from the changes?

Cut

Company cars

Work-related training

Car parking near your workplace

Gym memberships

Health screening checks

Mobile phones, Computers and tech

Will-writing services

Gadget insurance

Group Life Assurance & Group Income Protection via Flex Benefit Scheme

Professional Fees & Subs

Protected (in a bid to encourage take up)

Pension contributions (the largest cost to HMRC in this area) and Pensions advice

Childcare vouchers,

Cycle-to-work

Ultra-low emission cars (75 co2 and below)

N.B. Intangible benefits (buying and selling holiday) are not included in these changes 

When will changes be introduced?

6th April 2017

N.B. Any arrangements in place before this time will be protected for a year (until 5th April 2018). Long-term agreements for cars, accommodation and school fees will be protected until 5th April 2021.

Are all the tax benefits being removed from the non protected arrangements?

The Government is scrapping relief on income tax and employer NI contributions.

Employees can still save their NI.

Will the affected schemes still offer any benefits once the new rules apply?

Yes, salary exchange schemes can still to continue to offer benefits to employees such as:

  • Employee NI saving
  • Low cost to employee (Corporate Purchasing Power)
  • Streamlined administration
  • Cost deducted via payroll
  • No underwriting

Actions

  1. Identify the elements of your current salary sacrifice scheme that will be affected.
  2. Calculate the financial impact this may have on your business.
  3. Consider the psychological and financial effect the changes could have on your employees.
  4. Help your team to understand the changes by being open and transparent, encouraging questions and dialogue.
  5. Capitalise on the short timeframe and encourage employees to sign up to any existing salary sacrifice schemes that are popular before April 2017.
  6. Consider easing financial loss by introducing other financial solutions for example voluntary benefits, where employees can make savings on everyday expenses.

If you would like to discuss these changes and the potential impact on your benefits with one of our strategic benefit consultants please contact us on 01883 332260 or at info@wingatebs.com

Protecting Vulnerability in Businesses

The loss of influential individuals through death or serious illness can be hugely detrimental to a company’s financial position, yet this vulnerability is often overlooked when considering the firms insurance needs.

We can provide advice and insurance solutions to protect against these risks.