The UK has an aging population many of whom currently reach retirement age having failed to provide sufficient financial resources to independently support themselves through retirement. This represents a painful long term budgetary headache for the UK government and more importantly the UK taxpayer who will have to fund it. The 2008 Pensions Act laid out the detail of the UK government's Workplace Pension Reforms intended to address the problem. The cornerstone of the reforms is a requirement for all UK employers to automatically enroll their employees in to some form of pension scheme unless the employee specifically chooses to opt out. If employers do not offer their own Workplace Pension Plan (WPP) then by default they must adopt the governments National Employment Savings Trust (NEST) defined contribution scheme. The important thing to appreciate is that no matter what form of pension scheme they choose all UK employers will have to provide a scheme for their employees whether they want to or not. Auto-enrolment will begin in 2012 with the biggest employers and will conclude by 2017 when all firms must enrol staff. The date when auto enrolment becomes necessary for individual firms depends on the last two digits of their PAYE reference number. Complexity and administrative costs mean small and medium sized enterprises often don't offer a pension scheme to employees. Soon this burden will have to be carried by these firms. Firms will have to make sure they contribute the correct amount in to their employees pension plans and modify their payroll functions to ensure the appropriate deductions are made from employee salaries. Miss-management of employee pensions could precipitate legal action. For many small and medium sized firms it makes sense to outsource the implementation and administration of their pension scheme and outsource payroll processing to an accountant. Outsourcing payroll and pension administration is a simple solution to the complexities and associated risks created by being involved in a pension scheme. A suitably qualified accountant will have the technical expertise to accurately manage contributions and will be legally responsible for any errors. The accountant is also likely to be acting for numerous other clients who have outsourced payroll and pension scheme functions which will give them the requisite specialist knowledge, experience and tools to do so more efficiently and therefore at a lower cost. About the Author: Richard Barlow works at McGregors Corporate an accountancy firm with offices throughout the Midlands UK. For further information about cost effective pension and payroll outsourcing come to: => http://www.outsourcepayroll.org.uk |
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