A QWPS could be… • A Stakeholder Pension • An Occupational Pension Trust • A M aster Trust, multiple employers • A Group of Personal Pension Plans • National Employment Savings Trust(NEST) • LGPS
Stakeholder Pension • Annual M anagement Charge maximum 1.5%pa of the fund value for 10 years • 1% per annum thereafter • M inimum contribution: £20 as a one off or regular payment • Typically a Personal Pension Plan though not necessarily • Until Auto Enrolment all employers with 5 employees were required to offer access to a ShP • Employers were not required to make a contribution • Only suitable for AE if fund charges are reduced to 0.75% pa
Occupational Pension • Employer establishes, or participates in, a trust • Employer typically pays all admin charges • Employees must not pay more than 0.75%pa • Strict governance, regulated by the Pensions Regulator • Generally found in larger employers, often used to replace closed Final Salary pensions
M aster Trust • An Occupational Pension Scheme • M ultiple employers participate by Deed of Adherence • Centralised administration, law firms often provide independent trustee services • M ay be an employer admin charge • Employees must not pay more than 0.75% pa FM C. • Widely used for AE and growing rapidly • Salvus, NOW:Pensions & the Peoples Pension are M aster Trusts
A Group of Personal Pensions • Charges must be capped at 0.75%pa FM C • Existing schemes may continue with current members • Certain contracts need to be in place between the provider and employer • Employer needs to Self Certify suitability for AE • Pension Providers have cherry picked employers • If you do not fit the profile* you may be turned away * Higher salaries, lower average age, stable workforce, single payroll, monthly paid
NEST National Employment Savings Trust • Statutory requirement to accept all employers on their Staging Date • Purpose built for AE to Government specification with government loans • Expected/ intended to cater for masses of smaller organisations • M ay be tax benefits to non taxpayers earning c. £10,000pa • Comprehensive governance in place • Investment portfolios designed to protect funds at retirement • Low FM C of 0.3%pa but 1.8% deducted from each contribution… … . • … … ..until government loan is repaid.
LGPS • Auto Enrolment Qualifying Scheme • Some Councils will have current & past members • Does not support the phasing of contributions from 2% to 8% • Employees pay 5 - 6%, Employer average 14%, many much higher • Unlimited liability for the employer, whatever it costs • M ay already have past service debt to pay in addition • CARE, a fraction of each years pay revalued to Pension Age • No longer a final Salary based pension
United by differences • Personal Pension contributions on actual pay, incl. SSP , SM P , SSP • Occupational Pensions on Pensionable Salary for employer, actual pay for employees • Trusts deduct contributions from gross pay, tax relief only if tax paid • PPs & NEST deduct net from net pay so 20% tax credit regardless • Some provide software to assist, some charge for this • Some have an admin charge, particularly if low contributions • Do not exit LGPS without understanding the financial implications
Useful contacts • www.thepensionsregulator.gov.uk • www.nestpensions.org.uk • www.gov.uk/ workplace-pensions GOV.UK • www.hampshirealc.org.uk • www.pensionsadvisoryservice.org.uk (for members) • www.enrolmystaff.co.uk
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