The Pensions Act 2008 imposes new obligations on
all employers which will come into effect from
October 2012. Staged over a four year transitional period, all
employers will be required to:
· Register and
operate a good quality workplace pension scheme for their
employees.
· Automatically
enrol eligible employees into that scheme
· Pay regular
contributions to the scheme
Starting in October 2012 these new obligations
will apply to the largest of employers first and over the four year
staging period will filter down to the smallest of employers.
Employers will be asked to register their preferred workplace
pension scheme with the Pension Regulator and then comply with the
automatic enrolment requirement. The chosen scheme may be an
existing workplace pension scheme that meets the minimum
requirements, or a new workplace scheme set up specially to comply
with the new obligations. A fall back option will be provided
in the form of a new national scheme, the National Employment
Savings Trust (NEST), which is being set up to provide employers
with a default option if no other solution is available.
The Joint Industry Board Pension Scheme (the
JIB Scheme) established in 1988 could provide the ideal low cost -
low administration burden solution to employers both large and
small.
Which employees are
eligible?
All employees aged between 22 and retirement
age, who are not already members of a workplace pension scheme and
who receive earnings (in 2006-7 terms) in excess of £5,035 per
annum.
In addition, any employee aged between 16 and
22 can ask to be enrolled in the workplace pension scheme.
What will it cost?
Employers will be required to pay
contributions for each scheme member enrolled in the nominated
scheme. Contributions will start at 1% of a band of earnings,
currently expressed as earnings between £5,035 and £33,540 per
annum (in 2006-7 terms). The minimum level of contributions
will progressively increase over a transitional or phasing in
period rising to 3% of the band of earnings in 2017.
Members will be required to contribute toward
the cost of their pension savings as well, the final rate at the
end of the phasing in period being 4% of the band of earnings with
a further 1% be added in the form of income tax relief. Both
members and employers will be free to contribute at a higher level
should they wish.
Are there any hidden or administration
costs?
Yes, particularly if an employer chooses to
run their own pension scheme or participate in the NEST. In this
event, employers will be responsible for the additional costs
involved in carrying out the specialised day to day administration
of the chosen workplace pension scheme.
By using a third party organisation to
administer a workplace pension scheme on their behalf, employers
can avoid most of the additional costs involved in carrying out the
administration of a pension scheme.
The JIB Pension Scheme – how it can
help
The JIB Pension Scheme is available to all ECA
members and will qualify under the pension reforms as a qualifying
scheme.
Specially designed for the electrical
contracting industry, all day-to-day administration activities and
communication with employers and scheme members are centralised, so
that the Scheme deals with each individual member from their
admission to the Scheme through to the ultimate payment of their
benefits. All paperwork, forms and leaflets are provided to
employers entirely free of charge.
Employers participating in the JIB Pension
Scheme are relieved of much of the day to day administration burden
and are only required to carry out:
- simple member enrolment procedures,
- limited record keeping,
- the deduction of member pension contributions via a PAYE
system,
- the payment of the combined member and employer contributions
to the Scheme for investment.
- notification of a members termination of employment or
withdrawal from service on grounds of retirement or death.
No other hidden costs are passed on to
employers, which makes budgeting for future pension costs a simple
exercise.
For more information
To find out more about the reforms, how they
affect employers and what action needs to be taken, visit http://www.jib-pensions.co.uk/
or call 020 8300 3009.
