As we’ve frequently referenced in previous insights, an employee’s mental health can have a significant influence on their performance and behaviour at work and one of the biggest issues affecting an individual’s emotional wellbeing is their financial situation.

There is often a link between someone struggling with money and poor mental wellbeing and if an employee is feeling low, it can make it tougher for them to manage their money. I regularly meet employees to discuss their pension planning and there seems to be a common theme of financial anxiety.  This clearly has an impact on the individual but is also likely to affect your business.  An employee who is worrying about money may find it difficult to concentrate on decisions, or they may be losing sleep or feeling worried which will impact their performance and productivity at work.

Financial worries take many guises, from struggling with debt, saving for a first home through to people in their late career striving to plan for the retirement they desire.

In recent years, there has been a shift in responsibility for financial matters from the state and employer to the individual and it is becoming increasingly clear that many employees are not equipped with the knowledge to make confident, informed decisions about their finances.

So what can a company do to help its staff?

Helping support an employee’s financial wellbeing through the provision of education services is an important part of any employee benefit strategy.  In my experience, many companies think of financial education as an expensive ‘nice to have’ and prioritise other benefits such as pension contributions, life and health insurance.  However, financial education and improving an employee’s financial wellness can have a much more positive impact on performance and wellbeing than other company-funded benefits.

Financial education is more effective if it is delivered when it’s most relevant.  The financial concerns and worries for someone in their early career are very different from those who are in the middle of their working lives or for those who are planning to face the transition in to retirement.   The ways in which the education is delivered should also be varied to reflect your employee’s requirements.

By offering employees help in managing their finances, employers are making a long-term investment in their workforce.  The benefits of financial education are clear; helping to support employees and improve their mental health will have a positive impact on their lives as well as business.

 

Half of UK employees lose sleep over work, with workplace stress leading to more drinking and smoking
  • 51% of employees lose sleep worrying about their job or work related concerns
  • Lack of healthy work/life balance a factor: 41% stay up late or get up early to check work emails
  • A third (34%) of employees who are smokers smoke more after stressful work days
  • Two fifths (42%) admit that stress and pressure in the workplace causes them to overeat or make unhealthy food choices
  • Employer attitudes don’t help – 21% employees don’t believe health and wellbeing is important to their boss

Stress at work can lead to sleepless nights and poor drinking and smoking habits among UK employees, according to new research from Canada Life Group Insurance.

A good sleep routine and healthy work/life balance are vital for physical and mental health – not to mention productivity – but half of employees (51%) lose sleep worrying about their job or work-related concerns, and one in ten (11%) go to work feeling tired every day.

A recent study shows sleep deprived workers cost the UK £40 billion a year in lost productivity.1

Two-fifths (41%) also say they sometimes stay up late or get up early to check emails, with men (46%) more likely to do so than women (36%).

Smoking and drinking encouraged in work environments

Sleep is not the only aspect of an employee’s health that can be negatively affected by work.

  • Over a quarter of employers who smoke do so more at work than they do at home (27%), with men (34%) more likely to do so than women (18%); a third (34%) say they smoke more after a busy or stressful day at work
  • A quarter (25%) of employees who smoke describe it as a good way to break up the day, while 28% have tried to give up smoking before but found it too hard to do so during the working week
  • Worryingly, 29% of employees do not think smoking has an impact on your likelihood of getting cancer. Yet in reality, smoking accounts for one in four UK cancer deaths.2
  • Younger employees are most likely to be susceptible to pressures around smoking at work. Twice as many 25-34s who smoke say colleagues have influenced them to smoke more often, in contrast to all employees (30% v 14%).
  • Nearly two fifths (37%) of these smokers also say they have tried to give up but found it too hard during the working week, higher than the 28% of all employees who said the same.

Employer attitudes take their toll on health and wellbeing

Employer attitudes are failing to encourage positive health and exercise habits.

  • Over a quarter (27%) of employees believe their boss and/or colleagues wouldn’t approve if they used their full lunch hour to exercise.
  • Two fifths (42%) of employees agree that stress or pressure in the workplace causes them to overeat or make unhealthy food choices, while the majority of employees (62%) skip meals when busy at work.
  • Unhealthy eating at work has led to many gaining weight as a result: two in five (39%) have put on weight since they started their current role.
  • A fifth (21%) of workers believe employee health is not important to their organisation, while just over a quarter (27%) believe employee health is important to their organisation – but only to maintain a productive workforce.

Paul Avis, Marketing Director at Canada Life Group Insurance, commented: “Employees who turn up to work feeling tired are less likely to be productive. Our research shows that workplace stress is often the cause of workers’ sleepless nights, with worrying about work related issues and checking emails keeping staff up at night. Stress can be just as damaging for staff as physical conditions, with 15.8 million working days lost last year to such mental health issues.3

“Providing staff with access to Employee Assistance Programmes – such as those provided alongside group income protection products – is one way employers can demonstrate their commitment to health and wellbeing and help reduce workplace stress. This is particularly important given many employees do not believe their employers value their health, and are unlikely to feel engaged with their workplace as a result. Tackling stress at its root will help reduce sickness absence rates and improve productivity – not to mention give staff a better night’s sleep.”

 

We actively encourage clients to regularly survey staff not only in relation to their benefits to understand the value placed on these but also on their working environment and how this can be improved. The answers could be enlightening and often little changes can be made that make a huge difference to morale and as such productivity.

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

The new regulations, that confirmed the change of dates from which the auto enrolment minimum contribution increases need to occur, have now been passed by Parliament.

The minimum required contributions and effective dates are detailed below:

Phasing dates Qualifying Earnings Basis Tier 1 Tier 2 Tier 3
Staging Date – 5th April 2018 2% (of which 1% employer) 3% (of which 2% employer) 2% (of which 1% employer) 2% (of which 1% employer)
6th April 2018 – 5th April   2019 5% (of which 2% employer) 6% (of which 3% employer) 5% (of which 2% employer) 5% (of which 2% employer)
6th April 2019 onwards 8% (of which 3% employer) 9% (of which 4% employer) 8% (of which 3% employer) 7% (of which 3% employer)

 

For more information or advice on Auto Enrolment please contact your usual Wingate team or call / email us on:

Tel: 01883 332260

Email: info@wingatebs.com

 

This information is based on our current understanding of legislation which can change without notice.  Professional advice should always be sought prior to making any changes to your arrangements or deciding on any action in this respect.

What is it?

Automatic re-enrolment occurs every 3 years and repeats the duties you carried out on your Staging Date. You must ensure all your eligible staff who are not active members of a Qualifying Workplace Pension Scheme (QWPS) with at least the minimum levels of contributions are re-enrolled back into your scheme.

 What you must do

  • Choose a re-enrolment date which starts three months before and ends 3 months after the 3rd anniversary of your Staging Date. For example, if your original staging date was 1st January 2014 you can elect a re-enrolment date of anywhere between 1st October 2016 & 31st March 2017
  • You don’t need to inform The Pensions Regulator of your re-enrolment date
  • You must write to the eligible staff individually, within six weeks of your re-enrolment date to tell them how re-enrolment applies to them
  • You must complete a new declaration of compliance no later than 2 months after your re-enrolment date

 What you cannot do

  • Ignore it
  • Operate postponement on re-enrolment i.e. you must enrol people on your re-enrolment date.

Who you have to re-enrol

Yes: Eligible staff who more than 12 months before your chosen re-enrolment date have either:

  • Opted Out
  • ceased active membership of the QWPS or
  • stayed in your QWPS but the contributions are less than the minimum required under the QWPS rules

No: Anybody who:

  • Has Opted Out or ceased active membership within 12 months of your re-enrolment date
  • Has given in their notice to end their employment or been given notice of dismissal
  • Has Primary, Enhanced, Fixed or Individual protection from tax charges on their pensions
  • Is a Director of the employer
  • Is a Partner of the employer where it is a Limited Liability Partnership

Hopefully your payroll system will automatically highlight most if not all of these people for you but you should check this well in advance of your re-enrolment window.

Opting Out

There is a one-month window in which re-enrolled employees can opt out of the scheme.

Next Steps

If you are nearing or within 9 months of the 3rd anniversary of your Staging Date please contact your usual Wingate contact or call / email us at:

Tel:        01883 332260

Email:   info@wingatebs.com

 

This article is a basic introduction to the subject and is not meant to be exhaustive document and should be treated as such. It is based on our current understanding of legislation which can change without notice.  It is not a recommendation for changing any existing arrangements and professional advice should always be sought prior to making any changes to your arrangements or deciding on any action to be taken.

We have received an increasing number of questions regarding the Chair’s statement for trust based Occupational Pension Scheme. Below are brief answers to some of those initial questions. It is not designed as an exhaustive briefing document and for further detailed information and specific advice please contact us on 01883 332260.

Who has to comply? Trustees of Trust Based money purchase (defined contribution) Occupational Pension Schemes

A Chair of Trustees must be appointed

When? Existing schemes within 3 months of 6 April 2016. New schemes within 3 months of the date the new scheme is established.

Who can be appointed as chair? The following:

  • An individual who is a trustee of the scheme.
  • A professional trustee body which is a trustee of the scheme.
  • An individual who is a director of a non-professional corporate trustee company.
  • A director of a professional trustee body.

How? Register on The Pensions Regulator’s online website

Key duties?  Signing Chair’s statement

A Chair’s statement must be produced

When? Within 7 months of the end of each scheme year.

For those schemes whose year end was before 5 April 2015 the scheme year will run from 6 April 2015 until scheme year end, then as above.

For schemes whose year end starts from 6 July 2015 the deadline for submitting the statement has already passed.

What are the key items the statement must contain?

Default arrangements

  • Statement of default investment strategy
  • Description of any review of the default arrangements and any changes undertaken as a result
  • Where no review was undertaken, the date of the last review

Charges and transaction costs

  • The charges and transaction costs applicable to the default investment
  • The range of charges and transaction costs applicable to any other investment fund options
  • Confirm the extent to which the charges and transaction costs represent good value for the members.

Core financial transactions

A description of how the requirement to process core financial transactions (e.g. contributions, transfers in and out, payments to members) promptly and accurately has been complied with.

Trustee knowledge and understanding

  • Confirm how the requirements for knowledge and understanding have been met
  • Confirm how the trustee’s combined knowledge and understanding together with the advice available to them enables them to meet their duties

 

This article is not meant to be exhaustive and is based on our current understanding of legislation which can change without notice.  It is not a recommendation for changing any existing arrangements and professional advice should always be sought prior to making any changes to your arrangements.

 

The Government has announced with effect from 6th April 2017 that they are reducing the Employment and Support Allowance (ESA).

ESA is paid to individuals by the state if they are unable to work due to illness or injury after they have been absent for 28 weeks. There are currently three levels of benefit, paid weekly:

  1. Basic Benefit paid from week 29 to 41:  £73.10
  2. Basic Benefit + Work Related Activity Component paid from week 42 for up to 39 weeks:  £73.10 + £29.05 = £102.15
  3. Basic Benefit + Support Allowance paid from week 42 up to State Pension Age:  £73.10 + £36.20 = £109.30

With effect from 6th April 2017 the Work Related Activity Component will be removed. Any employee on sick leave from late September 2016 (becoming ESA claimants 28 weeks later) will only receive the Basic Allowance or Basic Allowance plus Support Component.

There is no change to the benefit paid to people eligible for the Support Component.

This means any employee eligible for the Work Related Activity Component will receive £1,511 per annum less from the State from April 2017.

Many Group Income Protection policies insure the benefit less the State Benefits on the insured benefit. This reduces the premium cost to the employer as it is assumed all claimants will receive the full Basic Benefit and the Work Related Activity Component. If this offset position continues it means the Group Income Protection provider will be insuring an additional £1,511 per annum of benefit the State was previously providing. This additional insured benefit will need to be paid for meaning there is likely to be an increase in the premium charged for the policy.

There are options available to keep the premium cost neutral which your Wingate adviser will discuss with you at the time of your scheme’s annual review but if you would like to discuss this beforehand please contact your usual adviser on 01883 332260.

 

This article is not meant to be exhaustive and is based on our current understanding of legislation which can change without notice.  It is not a recommendation for changing any existing arrangements and professional advice should always be sought prior to making any changes to your arrangements.

In a move that could increase the Treasury’s annual revenue by up to £1.75 billion, the Chancellor announced in the Summer Budget that the standard rate of UK Insurance Premium Tax (IPT) will increase from 6% to 9.5% from 1st November 2015.
IPT is a tax on general insurance premiums and there are two rates: the standard rate applying to products such as home and contents, motor and private medical and cashplan insurance.  There is a higher rate of 20% that applies to travel, mechanical/electrical appliance insurance and some specialist vehicle insurance, although this has not been affected by the change.

The new standard rate will be due on premiums received on or after 1st November 2015, except where insurers operate a special accounting scheme. In that case, the new rate is only applied to premiums relating to risks covered by the terms of a contract entered into after 1st November 2015; however, from 1st March 2016, the new rate applies to all premiums, regardless of when the contract was entered into.

Insurers are concerned about whether this represents part of a gradual move towards aligning the IPT rate with the VAT rate of 20%, something that is quite common in other EU member states.

In terms of the affect of this change on employers, we expect most medical and cashplan insurance providers to simply add the additional tax to their normal rates, meaning that most clients with these schemes should expect to be offered renewal terms with a larger than usual increase at the next renewal.  In turn this will increase an employee’s taxable benefit as IPT is included in the employee’s P11D liability figure. It is therefore essential that all options are considered, including possibly potential alternative insurers and policy structures to ensure you minimise the affect of the IPT increase wherever possible.

Also, if you have been considering establishing a new medical insurance or cashplan scheme for your employees you may wish to consider implementing these prior to 1st November 2015 whilst IPT at it’s current lower rate.

If you would like a no cost, no obligation review of your existing benefit schemes and/or wish to discuss the options around establishing a new employee benefit scheme please contact us on 01883 332260.

All statements concerning the tax treatment of products and their benefits are based on our understanding of current tax law and HM Revenue and Customs’ practice. Levels and bases of tax relief are subject to change. This is information is not provided as advice or a recommendation.

 

It’s surprising that given the number of changes that have been made to UK pensions in the last 18 months, there are still so many people still do not know what Pension Wise is, who it’s for, or what it does.

Pension Wise is the Government’s free, impartial retirement guidance service that’s open to everyone aged over 50, who is seeking information about how they can turn their pension savings into a retirement income.

It was introduced following the retirement option changes announced in the 2014 budget and specifically it can:

  • Provide guidance on defined contribution pensions only
  • Help you understand what can be done with your pension pot, how to shop around and potential taxes and fees
  • Highlight pension scams and how to avoid them
  • Explain the importance of ensuring your money lasts as long as you do

You can arrange a meeting with Pension Wise either over the phone via The Pensions Advisory Service known as ‘TPAS’ or face to face via the Citizens Advice Bureau.  They will discuss your pension(s) based on the information you provide and highlight the options available, before providing a summary of these.

This is a useful service for individuals approaching retirement age but it is important to note that Pension Wise cannot give financial advice, will not recommend any products and will not tell you what to do with your money.

If you are an employee of a company whose Workplace Pension we manage and are approaching retirement we will provide you with clear straight forward retirement advice considering all the options available to you.

To access this advice please contact our
Corporate Pension Team on 01883 332260