The latest from our Scottish consultancy team, based in The Capital Building on Edinburgh's St Andrew Square

Are we there yet? 

A phrase every parent in the land will hear at least once too often. Probably a lot more often than that.

If you’re responsible for managing your employer’s workplace pension scheme you might be getting the same question from your scheme members and maybe even your FD, who might be under the impression that with the final auto-enrolment contribution increases taking effect in April, that pension related changes are complete.

But as so many back seat children find out, the answer is firmly ‘no’.

The DWP’s “Automatic Enrolment Review 2017: Maintaining the Momentum” report has recommended further changes designed to ensure pension scheme members, your employees, have a more financially viable retirement. Cutting to the chase, it is highly likely there will be more changes meaning, in many cases, the need to be contributing more and for longer to help build up bigger retirement savings.

One of the first of probably many steps is expected to be the removal of the lower earnings limit (LEL) deduction from qualifying earnings, meaning that for employers who pension on qualifying earnings, all employer and employee contributions would be paid on earnings from the first pound for everyone enrolled.

If you need help understanding what these proposed changes mean for your business and pension scheme, or if you simply want to get ahead of the curve, get in touch.

There is, though, more to come - I’ll update you on that in my next blog!

P.S. For an employer with 200 members who are pensioned on banded qualifying earnings, removing the LEL deduction could mean an extra £98,000 of pension contributions each year, of which at least £36,800 would be payable by the employer. Based on the 2019/20 LEL of £6,136.



Posted by Nick Frankland

Topics: Workplace Savings, Pensions

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