NEST, the National Employment Savings Trust launches in 2012.
All employers will be forced to set up a Company Pension Scheme for their employees or auto-enrol their employees into the new NEST pension scheme. Group personal pension schemes (GPPs) have emerged as one potential solution which could help employers keep control of what pension benefits are offered to different individuals.
NEST pension or GPPs?
The main attraction of GPPs is their simplicity. The employer passes contributions straight from payroll to the provider and this is then invested as per the employee’s instructions. Through a group scheme, each employee has their own plan so they benefit directly (and only) from their own contributions and can also decide how this is invested. Contributions benefit from tax relief at the employee’s highest rate and employers can also make contributions to top this up.
This not only helps the employee but also the company tax bill – and can also reduce national insurance contributions. In addition, an employer contribution of at least 3% (which will be phased in between 2012 and 2016) is a requirement demanded by the NEST rules. Note, however, the rules are still being finalised, so may be subject to change.
Finally, at the end of the employment, employees simply take their sub-plan with them and keep contributing themselves. This reduces the need for employers to administer retained benefits and also helps the employee keep their career pension savings in one place.
If you think your business would benefit from a group personal pension scheme rather than being forced to meet the requirement of NEST, our dedicated Corporate Pensions Advisor would be happy to help talk you through the pros and cons. Call now on 0141 764 0040.