Life begins at 55. Well, possibly … depending on the pension arrangements you’ve made. You see, at 55 you and your employees can start drawing on your pension, and if it’s a good one, that means you’re free to wave goodbye to work for ever. Not many people are aware of automatic enrollment pension schemes and how they work, but having a healthy pension is a vital part of having a fulfilling life.
So, how does this pension scheme work? Well…
By law, every employer needs to create a platform to contribute to a pension with a minimum of 2% and this will continue to increase to 3% in the next tax year. For those of you who are employers it is important to know that to remain a qualifying scheme, all automatic enrollment pension schemes with contribution rates that would be below the minimum amount after the rate increases must apply the higher rates.So, if you’re an employer: make sure you pay in the right amount, otherwise you’re breaking the law. If you’re an employee – you’re going to have to pay in a minimum of 3% this year, rising to 5% next year.
Is that all clear? For most of us it’ll take us until we’re 55 to work out what that all that means. A healthy pension equals a happy employee!
Want to know more about your responsibilities as an employer or have a question about accounting? Give us a call!
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