New Pension Plans from Small Businesses

Prestige Tax and Trust Services discuss auto-enrollment pensions

The team at Prestige Tax and Trust Services were interested to read about the new tactic being employed by smaller business firms to attract better staff. Some businesses are planning to utilise new pension schemes to attract a higher calibre of skilled employees. A recent study suggests that many businesses feel that a better retirement deal will encourage top jobseekers to apply.
Businesses will be required to provide these new pension schemes under the Government’s auto-enrolment scheme. Many small to medium-sized businesses are reaching the date at which they must start routinely placing their workers into a pension scheme. With this in mind, many are planning to take it one step further to offer their workers a great end of service deal.

As things stand, companies must only contribute 1% of a worker’s salary to a pension pot. This figure is then matched by the worker on a month-to-month basis. However, the latest study suggest that around 17% of small businesses will pay in more than this amount in the hope of recruiting and retaining top-quality workers. Almost half the businesses questioned believe that these levels, set by the Government, are too low.

Smaller businesses often tend to know their workers personally and so have their best interests at heart. In general people seem to think a larger company will pay a better pension. This is not always the case, however. Small companies are really starting to feel the benefit of offering their staff generous rewards for good, sustained work. Even a very slight increase in the amount paid into a pension pot can incur much larger returns in the end.

While the Government’s minimum guidelines are set at just 2% for the moment, this will rise to 5% in 2017, with 2% of that coming from the employer and 3% from the employee. This will rise again in 2018 to 8%, with 3% coming from the employer. Industry experts suggest, however, that workers should really hope to put away 18% of their salary if they are part of a contributions-based pension scheme. This is necessary to enjoy a comfortable retirement.

Planning is vital if you’re hoping to maintain a good quality of life when you retire. If you’re looking to plan for the future, visit the Prestige Tax and Trust Services website for our full range of services. You can also follow us on Twitter for regular updates.

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