Member Article

Budget changes will provide massive boost for workplace pensions

The changes in pensions legislation, which were announced by Chancellor George Osborne in the recent Budget, make workplace pensions a “total no-brainer”, according to Stephen Groves of leading Yorkshire independent financial advisers G&E Wealth Management.

Mr Osborne announced that, as from April 2015, anyone aged 55 or over was entitled to access all their defined contribution pension fund in a single lump sum rather than having to convert it into an income for life through an annuity.

Mr Groves explained that some employees had previously opted out of workplace pensions because they had to purchase an annuity at retirement which provide a nominal amount of pension each yearif they didn’t have significant pension savings.

“But now, faced with the enticing prospect of taking everything out as a lump sum, I predict that the opt-out rate will be virtually nil,” said Mr Groves. “Putting it bluntly, it’s now a total no-brainer to join a workplace pension scheme,” he added.

Under the workplace pensions legislation, eligible employees benefit from their employer contributing to their pension scheme providing they themselves contribute.

Mr Groves explained: “This means that eligible employees could have their savings doubled based on current minimum contribution levels, and get tax relief on their employee contributions. Minimum contribution rates rise over time but employees will still get a great deal because they are having their savings boosted by over a third at no extra cost to them”.

He added: “The team at G&E Wealth Management, which has offices in York and Leeds, advises both employers and their employees on how to make the best workplace pensions choices. Employees can then match their future income needs with the pensions and savings they have accumulated so far.”

Meanwhile the close relationship between G&E Wealth Management and leading Yorkshire accountants Garbutt & Elliott, means that they are able to offer a personal, joined-up, one-stop shop service both to employers and employees.

Lorraine Young, the payroll manager with Garbutt & Elliott explained: “This is our unique full service approach, as we can cover all angles from overseeing the payroll to sorting out the best pension for the employer and looking at tax-efficient options for employees. Some employers, faced with this deluge of red tape, are already outsourcing their payroll operation and we fully expect this trend to continue.

“We are here to advise about the options, the duties and the consequences of the revolution in workplace pensions, which face every single employer in the country,” she added.

This was posted in Bdaily's Members' News section by G&E Wealth Management .