Since the first lockdown parts of the economy and businesses have been suffering hardship and unfortunately the recent lockdown has not helped. Who knows what is around the corner with the forthcoming regional tiered lockdown?

To date there has been some help from government with the initial furlough scheme covering some wages and employer pension costs. Unfortunately, each new version of the furlough scheme has been less generous. The current scheme which is available until 31.03.2021, only covers 80% of wages up to a cap of £2,500 per month and no contribution towards employer national insurance and pension contributions.

It is sometimes forgotten that an employer has a legal obligation to maintain employer pension contributions regardless of whether staff have been furloughed. Failure to fulfil this requirement may lead to legal action by The Pension Regulator (TPR). Unfortunately, The TPR’s quarterly compliance and enforcement bulletin has highlighted there has been an increase in unpaid contribution and compliance notices compared with last quarter. The quarterly bulletin shows a 191.4% increase in unpaid contribution notices from 352 to 1,026 and a 17% increase in compliance notices from 13,185 to 15,420 compared to the previous quarter.

If you are having problems making contributions, there are options available. The first of which should be to contact the regulator, TPR via 0345 600 1011 who may be willing to issue an easement notice to give you time to catch up on any missed contributions.

Also if you are contributing more than the minimum contributions or have self-certified via one of the three tiers a review by a qualified pension adviser such as Wingate BS may highlight the ability to reduce contributions to the statutory minimum which could significantly reduce the employer (ER)pension contributions.

There are a number of factors you should consider when deciding to decrease the ER contribution, including:

  • your employment contracts with your staff and whether any changes need to be made, by agreement. You may wish to seek legal advice on the process.
  • any agreements you have with recognised trade unions or other staff representative forums to discuss or notify of such changes.
  • the rules or governing documentation of the pension scheme you use, whether these currently permit you to reduce your contributions to the statutory minimum or whether you will need a change to the scheme rules. If the pension scheme you use is a Group Personal Pension, you might be able to do this by changing the arrangements you have for paying contributions without the need for a new or amended contract. If you are unsure of your scheme provisions, you should speak to your scheme trustees or provider.
  • who has the power under the rules to make changes if you have a trust-based scheme,this might be you or the trustees or a shared power. If the power is a trustee power or shared power, you will need to engage with the trustees of your scheme. Even if you have the power to amend the scheme rules, we would recommend that you notify the trustees beforehand.
  • whether there are rules that apply under pensions legislation, even if employment law permits. For example, employers with at least 50 employees with a defined contribution pension scheme, are legally required to consult with members if they are making changes that decrease employer contributions.

There are other changes which could be considered such as delaying  new joiners being added to the scheme and introducing salary sacrifice which could lead to considerable ER national insurance contribution savings and these savings could help pay towards the cost of ongoing ER pension contributions. Some legacy pension schemes set up at the start of auto enrolment can have monthly administration charges payable to the insurance company, a review of the scheme could result in the removal of this cost.

If you would like to discuss your options to maintain compliance with pension legislation whilst reducing the cost of running and contributing to the pension scheme, please get in touch.

 

 

Many women take a career break to bring up their children.  But how does this affect your State Pension and how can you check that you will receive the correct entitlement?

You will only receive the full amount of State Pension if you have paid or been credited with, National Insurance contributions for 35 years.

You can ‘earn’ credits whilst not working and looking after your children.  You will get National Insurance Credits when you claim Child Benefit until your youngest child is 12 years old.

The credits will automatically be added into your National Insurance Account when you claim Child Benefit, so you don’t need to do anything.

Child benefit is a payment from the government to help you with cost or bringing up your child, which is paid every 4 weeks.  Payments are normally tax-fee as long as neither parent earns more than £50,000 a year.

The Higher Income Child Benefit Charge was introduced from 7th January 2013.  Since this date, couples living together where one person’s income is £50,000 or over have been subject to a tax charge on Child Benefit.  This means that for anyone earning over £60,000 the payment of Child Benefit is effectively wiped out.

HOWEVER, if you or your partner earns more than £60,00 you must still register for Child Benefit, so you qualify for National Insurance Credits.  You can then opt out of receiving payments.

If you are working and getting Child Benefit, you could be building up more credits than you need.  You can transfer your credits to either you partner if they are not working or are on a low income and not paying National Insurance Contributions.

You can also transfer National Insurance credits to Grandparents, or other direct family members if they look after your children under the age of 12 for at least 20 hours a week though you have to apply to have your credit paid to someone else.

We recommend everyone checks their State Pension entitlement regularly to ensure that you have all the correct credited years toward your state pension.  It is easy to check how many years of National Insurance credits you have and what these might give you at the following link: –

https://www.gov.uk/state-pension-statement

Cast Study taken for the Money Advice Service     https://www.moneyadviceservice.org.uk/en

Rita 69 years old

I have to manage on just over £170 a week – that’s the State Pension, a very small work pension and Pension Credit.  Of course, I didn’t think about pension when the children were growing up.  But now I’m retired and divorced, I wish I had.  If I had my time again, I would definitely make a few sacrifices to be able to put something aside for old age.  You think retirement will sort itself out bit it doesn’t – you have to plan for it.

Should you wish to discuss your future pension planning, then please do contact us at Wingate

E: info@wingatebs.com

T 01883 332260

 

This article is based on our current understanding of National Insurance Credits.

 

 

The government are currently making a massive push to ensure that individuals age 50 or over understand the options available to them with Defined Contribution (DC) pensions which may either be a personal one, workplace one or both.

To do this the government are promoting the services of Pension Wise which is a free and impartial service set up by government in 2015 which offers guidance for people regarding their options at retirement. Demand for the Pension Wise service has grown every year since its launch in 2015. In 2019/20, the Money and Pensions Service delivered over 200,000 Pension Wise interactions, including telephone appointments, face to face appointments and online sessions, more than triple the number delivered in the service’s first year.

All in all, I truly believe that access to Pension Wise should be seen as a positive and the fact that the government are promoting this service should be commended however…once a Pension Wise appointment has been attended, what happens next.

As part of the appointment with Pension Wise, they will present options to the individual which will guide them down a particular path leading to one of several outcomes which could include but is not limited to:

  • Full Encashment
  • Annuity Purchase
  • Flexi Access Drawdown

Once the end of this path is reached the adviser at Pension Wise (who cannot give advice on the most appropriate option) will recommend that the individual visits a website called unbiased.com and seek advice from a qualified financial adviser who can then put into place a plan which meets the needs of the individual. As the qualified financial adviser will need to carry out their own fact find on the individual to provide advice, would the individual have been better off going to the financial adviser in the first place? I am not saying that there is no value to the Pension Wise service, it certainly has its place and a general information service certainly saves time than carrying out your own research but…

If my car broke down or had a problem, I would take it to a dealer or local garage to understand what is wrong with it and find out what needs to be done to fix it. Of course, cost and potentially length of time to fix the problem would be factors in my decision in using a particular garage/dealership but at least I would have all the facts with which to decide.

If we compare this to the Pension Wise service, they would very much be able to diagnose the problem with my car, tell me what needs to be done to fix but in effect direct me to the garage down the road as they can’t actually fix my problem. If this happened to me I may possibly think that my time spent with Pension Wise was OK, but not necessarily the best use of my time and that perhaps I should’ve just gone to the garage/dealership down the road in the first place.

Don’t get me wrong, Pension Wise certainly has a place in the market and for many people it will be an invaluable resource from which to obtain guidance around retirement options and the next steps available however taking the above into account, should an individual just go to a qualified Financial Adviser in the first instance?

If you would like to learn more about Wingate Benefit Solutions standard workplace pension service proposition which includes pension access guidance as a minimum, then please contact Wingate on 01883 332260 and info@wingatebs.com

The pandemic has had a huge impact on the way we live and work and many employees are still working from home. We are in lockdown again and this time we don’t have the sunshine as a consolation. Some of us may be dealing with possible job losses within the family, having to shield loved ones, or having to provide home schooling. Winter is nearly upon us and for these reasons and more, employees may well feel isolated.

Since March, many employers have responded by putting more focus on promoting mental wellbeing and supporting employee engagement to make sure nobody feels alone.

There are lots of initiatives an employer can introduce, such as providing training for appointed employees to become mental health first aiders. They can then be the first point of contact to support staff who may be experiencing a mental health issue or emotional distress.

Mental health webinars would be another great addition, these are readily available and generally free of charge. Such webinars can provide employees with valuable information and tips on how to maintain their wellbeing, especially as we go into winter where isolation naturally occurs.

I think the majority of us have become accustomed to virtual meetings through platforms like Zoom and Teams. These have proven to be such valuable tools for business but it’s important to utilise these for social purposes too. We all miss going out for a team lunch, or a trip to the pub. Let’s hope we can get back to these in the not too distant future, but in the meantime we can make use of these online platforms to help create an inclusive environment for all for things like a virtual breakfast, a Friday quiz, an after work drink or maybe just a general catch up. The social element cannot be forgotten in these difficult times, we need this to bring our colleagues together.

Physical wellbeing is also so important, especially for those with busy sedentary jobs. It can be challenging to take yourself away from your PC/laptop to get that all important dose of daily exercise. Employers can promote healthy activities, perhaps a running ‘club’ or a challenge to achieve a certain number of daily steps. Communications to encourage hydration and health eating habits would also be a great way to promote physical wellbeing.

The challenges we have all faced over the last few months mean that employers need to make sure their employees feel supported and connected to the organisation and more importantly, each other. This is essential to make sure no one feels isolated, especially with those cold, dark days ahead.

If you would like to discuss your wellbeing strategy please do get in touch.

 

You know you have a problem when the Minister for Pensions and Financial Inclusion, Guy Opperman says:

‘For too long pensions have been shrouded in complexity and technical jargon, limiting people’s understanding of their savings and hampering their retirement planning.’

To be fair, I completely agree with him and make him absolutely correct!

Historically pension statements have been issued on an annual basis, are usually 8-10 pages long and may potentially grab the reader’s attention for the first 2 pages, possibly 3 at a stretch. The reader is likely to simply file this statement into their dusty old pension file where it will sit with the last 5 years’ worth of statements. Most lay people tend to want to know 3 things:

  • How much money is in my pension pot?
  • How much money will this give me when I retire?
  • What can I do to improve these figures?

Recently, pension providers have been taking steps to make their pension statements more engaging such as including colourful pie and bar charts and also issuing them online to make them more accessible but is the message getting across to the consumer?

The Department for Work and Pensions (DWP) has announced proposals that will mean that annual pension statements for workplace pensions will have to be condensed to a maximum of two pages.

The DWP proposals will require pension providers to provide pension statements and structure them in such a way that draws members’ attention to the three key areas mentioned above.

The initial focus will be on defined contribution schemes used for Automatic Enrolment, with a view to later improving consistency across all types of pension schemes.

Simpler statements will include a line on costs and charges and a clear signpost for a more detailed assessment of this information elsewhere to help members see what they have paid for their pension.

Guy Opperman has also said:

‘Simple statements will usher in a new standard for how schemes communicate with their members – vastly improving people’s understanding and engagement with their pensions.’

With more people saving for their retirement than ever before thanks to Automatic Enrolment, it is vital they can understand what’s going on with their hard-earned money and actively plan for their future.

Simpler pension statements support the department’s ambition to make information about pension saving more accessible to consumers, running parallel to the department’s championing of the use of dashboards, an innovation that will allow savers’ pension information to be accessed on digital devices at any time they choose. Further work to encourage and drive the consolidation of small pots will also lead to better outcomes for pension scheme members.’

If any of your employees are having any difficulty in understanding their pension statements in their current form, then please do not hesitate to direct them to our experienced team at Wingate on 01883 332260 or at info@wingatebs.com who will be able to help them make sense of what they have and how it works.

Ref: https://www.gov.uk/government/news/simple-statements-boost-for-pension-planning 19th October 2020

Group Life Assurance benefits will pay a lump sum benefit upon death of an insured employee. However, what many people overlook is that traditionally Group Life schemes are written under registered pension scheme legislation and as such, there are instances where an individual can invalidate their pension protection by joining such a scheme.

The Lifetime Allowance (LTA) was created when pension simplification legislation was implemented in April 2006. Benefits which count towards the LTA include registered pension and lump sum death benefits from registered Group Life Assurance schemes. Historically, the LTA was £1.8m but since April 2012, this has been reduced a number of times. For 2020/21, the LTA is £1,073,100. Benefits which exceed the LTA are subject to a tax charge of up to 55%.

Individuals with benefits above or approaching the LTA can apply for pension protection from the HMRC. Since the introduction of the LTA, there are several different types of pension protection which have become available to enable individuals to protect the value of benefits that they have built up (and future benefits that may accrue) from tax charges. If pension protection is granted, these protections are subject to different conditions and strict rules and if broken, the protection will be withdrawn.

A potential issue with registered group life arrangements is when an employee with Pension Protection joins a ‘new’ registered group life scheme due to the fact that they have joined a new employer, the protection may be voided, depending on the type of protection they have and when this was granted. An employer may not be aware of employees who have pension protection in place, as this is arranged on an individual basis. A Group Life scheme is classed as a ‘new’ arrangement if the Pension Scheme Tax Reference (PSTR) number which applies to the scheme changes or a new trust is arranged for a scheme.

The alternative, an ‘Excepted’ Group Life scheme, provide lump sum death benefits outside of the registered pension scheme environment. Therefore any benefits paid are not currently included in the calculation of the LTA. You may wish to consider setting up an Excepted scheme for a defined section of your membership. There will usually be no difference in cost for this type of arrangement and you would need to execute a trust deed prior to implementing the insurance policy.

There are advantages and disadvantages of the way a scheme can be established and managed over another. There are some differences between Registered and Excepted schemes, which include potential tax charges in certain scenarios on an Excepted scheme. If you would like to discuss the different options available and which may be suitable for your business, please do get in touch.

The CBILS has been designed by the government to support the continued provision of finance to smaller businesses (SME’s) who have and are experiencing lost or deferred revenues, leading to disruptions to their cashflow as a result of the Covid-19 outbreak. The scheme supports a wide range of business finance products, including terms loans, overdrafts, invoice finance and asset finance facilities.

Without this scheme many SME’s would struggle to operate and possibly cease to trade meaning that this intervention made by the government has been much needed. What would happen to the business however if one or more or the business owners passed away or is diagnosed with a critical illness? In a normal circumstance the loan will still need to be repaid and the funds used for this purpose will eat into any potential value in the business that tends to be passed across to family members in the form of a shareholding or cash sum.

As a result, should some form of Business Loan protection be considered?

What is Business Loan Protection?

Business Loan Protection helps the business pay any outstanding borrowings such as a loan or commercial mortgage, should the person(s) covered die or become diagnosed with a specified critical illness. In some situations insurers are also able to consider including cover for overdrafts or director loan accounts.

How does Business Loan Protection Work?

Business Loan Protection is either life assurance or life assurance and critical illness cover written on the life of the key individual or individuals so that any money due can be used to pay towards any outstanding debt or loan. The money will be paid to the business where it is a company, Limited Liability Partnership (LLP) or Scottish Partnership. Where the business is a partnership, the policy will be written on an own life basis and may be placed in trust for the other partners.

How much cover do I need?

The level of cover reflects the amount needed to pay the outstanding borrowings. The policy should be set up to reflect the terms of the borrowings and could be on a level or decreasing basis.

There are various issues to consider around Business Loan Protection and these are highlighted below:

  • What would you do in the event of the loss of the individual or individuals who have guaranteed a loan?
  • What would you do if an overdraft, loan or commercial mortgage is unable to be paid due to the loss of a shareholder or director?
  • Director loan accounts should be repaid on death – where will this money come from?

If Business Loan Protection Insurance that you are looking to discuss, please contact Wingate Benefit Solutions on 01883 332260 or at info@wingate.com and we will be able to help.

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.

You’re satisfied with the employee benefits you have in place and are comfortable with the associated costs. But are you confident your employees fully understand the benefits which are available to them? If you have invested time and money into developing your benefits package, it is vital that you have an effective communication strategy in place to make sure your staff are taking full advantage of what is on offer. Below are some examples of aspects you may wish to consider when developing your communications strategy:

Communication

As the saying goes, ‘communication is key’ and often we find that staff are told about employee benefits when they join a company, as part of their induction, but this doesn’t get mentioned again. Regular communications thereafter will ensure everyone remains informed and engaged. This could include specific communications during different lifestyle events e.g. marriage/the birth of a child.

Appoint Employee Benefits ‘Champions’

One way to fully involve employees in the communication plan is to appoint employee benefit champions. Seeing fellow employees being proactive and positive about the benefits schemes will encourage the workforce as a whole to get involved and participate. This is a great way to spread knowledge and enthusiasm.

Put it in writing

All information about the benefits you offer should be in writing. This should be in a format which is easy to read and digest. Every employee should be given a copy of your benefits handbook, and an overview on how to locate commonly sought information.

Use of Online Platforms

If your company uses an intranet site, this can be a great platform to communicate information about your benefits. You could also look to maximise your use of free social media platforms such as Twitter or LinkedIn. An internal group could be created to keep employees up to date on the benefits they have access to.

Staff feedback

Employee opinion surveys are a great way to measure the level of understanding that employees have about the benefits you provide and how engaged they are. These surveys can also provide you with an indication of what benefits your staff value the most. Effective communications don’t need to be costly. You can maximise the use of systems you already have to provide information in a quick and easy way. Wingate can help you to develop your employee benefits strategy, to ensure your staff are making the most of the valuable benefits you provide for them. If you would like to discuss further, please don’t hesitate to get in touch.

One of the most common questions that we get asked as advisers is, Can I transfer my old Pension into my current Workplace one?

We find the initial motivation behind wanting to transfer pensions into one arrangement is usually to keep their affairs in good order with everything under ‘one roof’. However, for some people, this very reason is their main reason not to transfer their pension as they do not like to have all their eggs in one basket. This initial choice to potentially transfer a pension or not is purely based on personal preference.

The initial response that we tend to provide to the question of transfers is yes, theoretically you can transfer however you need to understand whether it is in your best interest or not to do so.

We would initially ask what type of pension you are considering to transfer, primarily because if you have an occupational style Pension of a Final Salary Pension, the general rule of thumb is that a transfer is unlikely to be in your best interest.

When reviewing pensions, it’s not uncommon for older style arrangements to have penalties levied as well as a raft of features and benefits lost upon transfer, these are often referred to as ‘safe guarded benefits’ and could be a Guaranteed Annuity Rate, a Guaranteed Minimum Pension or entitlement to more than 25% of the fund as tax-free cash.

The charging structure on your old pension will help clarify if any penalties would be charged on transfer and also helps you see if your old pension is more expensive (higher level of charges such as the Annual Management Charge) to run than your current workplace pension.

If you are reading this blog and are wanting to know whether a transfer of pensions is an option for you to consider, please feel free to email us at info@wingatebs.com or call us in 01883 332260 and one of the team will be able to help. When we have this initial contact with you, we will set out your options which could include general guidance, full transfer advice or directing you to your pension provider, depending on how you would like to proceed.