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.

Most people in the UK these days tend to have online access for their bank accounts which we can see via a desktop PC, tablet or mobile phone. This is access is really useful as it allows us to track our own money and understand in an instant, what funds we have.

Although slow to come to the party, all major providers of Workplace pensions now also offer this on-line facility to allow members to have visibility of their pension via one or all of these above methods. It is important to note however this is very much driven by how old or new the contract you have is, with older style contracts not generally being available online.

Every provider’s on-line offering will be different, but the most commonly available online features allow you to:

  • See an up to date value of your pension
  • See where your monies are invested, i.e. which investment funds you are investing within
  • Change your investment strategy if required
  • See how much you are currently investing into your pension
  • See what your selected retirement date is on your pension
  • Change your target retirement age – if the default one is no longer appropriate
  • Make changes to your home address or other personal details
  • Update your nomination of beneficiaries for death benefit purposes

If you haven’t already done so then we would strongly recommend that you take 5-10 minutes to register for online services with all pensions, where available, that you may have accrued over the years. Details of how to do this will be shown on the latest pension statement that you would have received from your pension provider.

If you can’t find your latest statement, don’t remember receiving one or have any questions whatsoever regarding online access then please contact your pension provider and they will be able to help.

I expect you have been inundated by emails related to Covid and the Coronavirus Job Retention schemes (CJRS), unfortunately a lot of them are full of jargon and not necessarily relevant to your circumstances. At Wingate we have been in regular contact with our clients and understand acutely as an employer ourselves, what is needed in plain English. With this in mind I will be publishing a series of useful blogs on the developing situation and the impact on employee benefits and pensions in particular.

HMRC have now launched The Coronavirus Job Retention Scheme (CJRS) and a number of you will have already made a claim but just to reiterate, you will need the following information for each furloughed employee:

  • National insurance number
  • Salary, NI and pension contribution information for you to calculate the claim amount

If you are implementing Furloughing via the government scheme the government will make the 3% minimum employer contributions required under automatic enrolment (AE), subject to the relevant caps although this may be lower than the employees’ contractual entitlement. Further information on the minimum contribution structure can be found via:

https://www.thepensionsregulator.gov.uk/en/employers/new-employers/im-an-employer-who-has-to-provide-a-pension/choose-a-pension-scheme/understanding-your-costs/making-contributions-to-your-pension-scheme-

Therefore you may be required to top up employer pension contributions. Further information can be found via the link below and where to submit a claim:

https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme

The Pension Regulator has a dedicated section on their website regarding the implication for employers and pension schemes at:

https://www.thepensionsregulator.gov.uk/en/covid-19-an-update-for-trustees-employers-and-administrators

Salary sacrifice/Smart pension contributions

I expect if you have a pro-active adviser or have recently set up your company pension scheme the default contribution method is likely to be via salary sacrifice on either an opt out or opt in basis often referred to as Smart pay.  The Pension Regulator and HM Treasury have recently updated their guidance regarding the interaction of salary sacrifice on pension contributions and Furloughed employee claims which is different to earlier guidance.

“You cannot include the following when calculating wages:

Non-monetary benefits like benefits in kind (such as a company car) and salary sacrifice schemes (including pension contributions) that reduce an employees’ taxable pay

Where the employer provides benefits to furloughed employees, including through a salary sacrifice scheme, these benefits should be in addition to the wages that must be paid under the terms of the Job Retention Scheme.”

The Treasury has confirmed this means in all instances that where employers operated salary sacrifice in the pay period being used as ‘reference pay’ for CJRS, you will only be able to claim 80% of post sacrifice pay. For example:

  • Reference pay to 19.03.2020 £2,000
  • Pension contribution 5%
  • Post sacrifice pay £1,900

An employer can only claim £1,900 * 80% = £1,520 to cover wages and must pay this to the employee as a minimum wage and can’t deduct the employees 5% sacrifice contribution from the £1,520 received. Subject to the scheme rules and the employee’s contractual entitlement, you may be required to make the employees contribution upon their behalf. However if you top up the CJRS, the employee’s salary sacrifice deduction can be deducted from the top up amount.

Please note that for schemes of less than 50 lives, The Pension Regulator has removed the need to consult staff regarding any pension contribution changes as long as they are temporary and apply only during the lockdown period.

It should also be remembered that all pension contributions are a percentage of earnings so if pay reductions are implemented either due to furlough or implementing temporary pay cuts, the employee and employer pension contribution monetary amount deducted will also reduce. However employees are able to vary their contribution percentage if they wish, subject to statuary minimums and scheme rules, they could choose to take a payment holiday or leave the salary sacrifice scheme. Although it should be noted that leaving the salary sacrifice scheme would not impact the calculation of wages for the CJRS scheme.

If you are struggling to make employer pension payments, we would recommend you contact The Pensions Regulator directly on 0345 600 2475 who are available Monday to Friday – 9am to 5pm to discuss your situation.

I hope you have found this information useful and feel you would benefit from a more pro-active pension governance service from an independent financial adviser please get in touch with myself by mobile 07775692128 or email mathew.rann@wingatebs.com .

Employers can help with the emotional wellbeing of their staff whilst working at home

The instant Working at Home revolution has shown how adaptable the UK work force can be when required. We are all embracing new ways of working with technology, such as Microsoft Teams and Zoom to stay in touch with clients and colleagues.

But how is the nation coping with Working at Home (WAH) and how can you as an employer help with the emotional wellbeing of your staff?

A new survey has started to be conducted by the Institute of Employment Studies to look at the effect of the COVID-19 crisis and how thousands of employees who are now WAH are dealing with impact of this change on their physical & emotional wellbeing, their morale and their motivation.

The main message so far from employees:

• Significant increase in muscular aches and pains in 2 weeks
• Poor sleep & increased fatigue
• Alcohol increase and diet & exercise declining for many
• Emotional concerns over finance, isolation, energy, work-life balance & family health
• Work motivation holding up for most, especially if in regular contact with the boss

The main message so far for employers:

• Make sure home ‘office’ set-up is safe and ergonomic & that employees are mobile & taking exercise
• Provide mental health support via informal messaging groups, virtual coffee mornings, access to Employee Assistance Programmes (EAPs) and regular contact with bosses & colleagues
• Focus on ‘high risk’ groups – identifying employees with financial concerns, those with elderly relatives to care for, those struggling to adjust, those prone to feelings of isolation, those at risk of domestic abuse
• Rethink performance targets & monitoring, involve employees in decisions about reorganising work and reallocating tasks & priorities

One good statistic is that 83% of homeworkers are reporting contact with their boss up to five times a week. 64% said there was an EAP available to them to provide advice and support. However, the question is around the quality of the contact from line managers and the support being offered.

Employers can start by using simple surveys such as The World Health Organisation- Five Well-Being Index (WHO-5), to help maintain contact with employees and assess how they are coping with the new working environment to help employers identify any employees who are showing signs of depression. The only drawback with this approach is that not all employees will admit to employers that they are struggling.

Where an EAP can help

EAPs can help employees by providing a place to talk over issues, fears, emotions and concerns. Fast access to specialist counsellors is available 24/7 and depending on the quality of your EAP, further support can be arranged in the form of counselling sessions.

In the current climate of coronavirus, social distancing means that there is no face to face counselling, but digital and telephone counselling can work just as well in helping to tackle emotional issues.

EAPs can also provide legal and financial information from specialists and partners. They can help with debt, legislation changes and new benefit rules, providing information that may alleviate some of the fear and stress that this pandemic is bringing to employee.

At Wingate, we can help you establish if you have a good quality EAP already in place and if you do, we can look at effective communication strategies for you to ensure your employees are aware of the EAP, what it covers and how to access help through it.

You may feel that in these challenging times it may be beneficial to provide increased levels of counselling through your existing EAP but are unsure whether this is possible? There are different levels of EAPs which can be dependent on whether you pay for your EAP or is yours ‘free’ with your group life insurance policy or Group Income Protection plan?

At Wingate, we can help employers understand all the above and more and provide recommendations for new arrangements or just small tweaks to existing arrangements. If this is something you may be interested in, please feel free to contact Wingate on 01883 332260 or at info@wingatebs.com

How Long Is A Piece Of String?

Typically, the main queries I’m asked as a Pension Adviser from members of Workplace Pensions tend to revolve around the level of income that they may need in retirement.

How much is enough?
What is the average?
What do others do?

These are the commonly asked questions and as an adviser it is like asking ‘How long is a piece of string?!

The only way to understand someone’s true income in retirement is to work through a budget plan with them based on their current scenario and make assumptions around which of those items won’t be around at retirement. This analysis should leave the member with a ‘target’ income to aim for at retirement and this is where the need for advice kicks in as the member usually then requires recommendations as to how they can reach their income goal.

At 42 years of age, if I was asked what income I would need in retirement, I’d only have half an idea as it is not something I have given much thought too as it is still quite a time away. However, like many others during the current Covid19 lockdown, my wife and I have spent some time tightening our belts by reducing unnecessary costs since my wife has been furloughed from her current role in the leisure industry. A few voluntary measures that we have taken include taking a mortgage payment holiday and temporarily freezing our Sky and BT Sports subscriptions (this hurt quite a bit). Enforced measures that we are experiencing revolve around reductions in our entertainment spending, such as fewer takeaways, less fuel for the car, not being able to take the kids out for entertainment (big savings here) as examples.

When we now look at our bank account, could this be what our future outgoings may look like? We’d like to think our mortgage will be paid off by the time we reach retirement although if I have my way, we’ll keep my Sky and BT Sport subscription. Will we need two cars? Will we go out as much? Will we be spending money on the kids…grandchildren? We don’t know the answers to these questions, but we think that the Covid19 situation has made us a little more in tune with what the future might look like. Now that we know what this figure might be, we can now look at what pensions we have and plan accordingly in terms of what these may give us as an income.

As part of Wingate Benefit Solutions Standard Pension service, we put planning for retirement at the heart of our Pension Member Services. We produce personalised member reports which are designed to empower a member to take control of their retirement planning and help them understand what their retirement income objectives are and whether they are on track to achieve these goals.

Our report is very effective because it clearly sets out information and solutions in a format that people can understand and as such, value. A member can include not only their current employers’ workplace pension but also any other pensions that they may have already accrued, regardless as to whether these pensions are defined contribution or defined benefit schemes. As these reports come at no cost to the member, the member can ask us to run as many scenarios as they would like to really nail down their plan for retirement, looking at different angles such as:

What if I change my retirement date?
What if I pay a little more in?
What if I don’t pay in as much?

By adopting Wingate’s Standard Pension service, an employer can really add value to their workplace pension offering to make their pension scheme stand out as a valuable benefit for their staff as part of their overall benefits package, designed to attract and retain quality members of staff.

For more information on Wingate’s Standard Pension Service, please contact one of the team at Wingate on 01883 332260 or at info@wingatebs.com

Pension Contributions – What Basis?

Automatic Enrolment legislation has now been around for 7-8 years and apart from the big FTSE companies and large SME’s who were likely to have already had established pension arrangements, I don’t think it’s unfair to say that ‘some’ pension arrangements may have been set up a little hastily with ‘being compliant’ being the absolute priority.

As in individual, do you do still do the same things in your personal life that you did 7-8 years ago? I know I do however there are some things that I regularly review, and these tend to be financial things.

Now that Automatic Enrolment is in a steady state and businesses are taking a deep breath before having to deal with the fallout from Brexit and the recent election, now may be a good time to sit down as an employer and review your pension scheme to see what is in place and whether it is still fit for purpose. Questions an employer may want to ask themselves could be:

• What does a perfect workplace pension look like?
• What outcomes are my employees expecting at retirement?
• How as an employer can I help my employees get the best outcomes for them?

One of the areas we at Wingate regularly get asked about are contributions. Not on the levels that are being paid, but instead, how the contributions are paid.

By way of some background, there are three ways an employer may wish to deduct pension contributions from an employee’s pay. These are summarised as follows:

Relief at Source

Pension contributions are taken from pay after it has been taxed. The pension provider then automatically adds 20% tax relief to employee contributions for all taxpayers with higher and additional rate taxpayers having to claim back extra tax relief personally.

Net Pay

Pension contributions are taken from pay before it has been taxed. This means that the employee’s contribution automatically receives tax relief at their marginal rate of tax and is not required to complete a self-assessment return.

Salary Exchange

Salary Exchange is an agreement between an employer and an employee where the employee exchanges part of their contractual gross salary or bonus in return for a non-cash benefit, in this case pension contributions.

Of course there are advantages and disadvantages to all the contribution basis’ summarised above however the choice on which option to use falls into the lap of the employer as they are in effect the ones who are setting up and managing the plan on an ongoing basis.

Currently there is a lot of noise in the pension industry now about how low paid earners are potentially missing out on tax relief on pension contributions if they are members of a workplace pension scheme that operates on a Net Pay basis. In the last general election, the government even made reference to this issue and confirmed that they will undertake a review however a timeline has not yet been published.

Whilst there are lots of action groups pushing the government to review and potentially abolish the Net Pay option based on the lost millions of tax relief throughout the country, surely some responsibility sits with the employer themselves who have the ability to select and subsequently change the contribution method to one of the other options stated above or even go to the lengths to change provider if the incumbent provider doesn’t facilitate the wishes of the employer.

At Wingate, we can help employers understand all the above and more and provide recommendations for new arrangements or just small tweaks to existing arrangements. If this is something you may be interested in, please feel free to contact Wingate on 01883 332260 or at info@wingatebs.com