Member Article

Deloitte comments on pensions contributions debate

Businesses should start planning for compulsory pensions contributions ‘the sooner the better’, according to a senior partner at Deloitte.

Responding to the Institute of Directors call to postpone the measures ‘until 2014’, director of pensions practices at Deloitte David Brown is calling on businesses to accept the legislation, and prepare for it accordingly.

“It has taken a couple of years for the legislation to be introduced, and when the changes come into place in October 2012, their will affect larger employers first,” he explained.

“For medium and smaller businesses, the staging dates are later and will run into 2014, and the economy could have picked up significantly by then.”

However, he does accept that it could be difficult for individuals who are already struggling to survive on their current salaries, and who will struggle even more if they are forced to contribute to their pension.

“It is a balancing act, but individuals get tax relief on their contributions, which will add to contributions from their employer and the government, so they are in a sense turning away free money.”

Equally, the administrative burden the legislation could also cause much confusion for employers.

“While the commitment and what employers need to pay is clear, the admin and HR aspects are less clear, as businesses will be required to keep payroll records detailing different categories of employees, how much they will need to contribute, and will need to address changes in contributions as employee wages change.

“Likewise, if employees choose to opt out employers will need to ensure they opt them back in every three years.”

David is now recommending that businesses start early and plan ahead to ensure they are adequately prepared for the legislation.

“The changes are manageable, but extensive planning is required to ensure that businesses are compliant from the offset.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .