Turkey Mill
Ashford Road
Maidstone
Kent ME14 5PP
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Core Financial Services LTD is authorised and regulated by the Financial Services Authority member no. 471184
Registered in England. Company Registration No: 5428054. Registered Office:
The Estate Office
Dacliffe Industrial Estate
Appledore Road
Woodchurch, Kent, TN26 3TG
PERSONAL ACCOUNTS 2012
The Pensions Act 2008 puts into law the reforms to the private pension system. These reforms build upon the Pensions Act 2007 and are aimed at enabling and encouraging more people to build up a private pension income to supplement the basic State Pension. The Act only applies to Great Britain but it is intended that Northern Ireland will make corresponding provision for its customers in due course.
The Pensions Act contains a number of measures aimed at encouraging greater private pension saving.
Automatic Enrollment
From 2012 it is planned that all eligible workers, who are not already in a good quality workplace scheme, will be automatically enrolled into either their employers' pension scheme or a new savings vehicle, which is currently known as a Personal Account Scheme. This means instead of choosing whether to join a workplace pension scheme provided by their employer, all eligible workers will have to actively decide not to be in a scheme, if for any reason they feel this is not a suitable form of personal saving for their situation.
To encourage participation, employees' pension contributions will be supplemented by their employers and through tax relief.
Minimum Employer Contribution
For the first time all employers will be required to contribute a minimum of 3% (on a band of earnings) to an eligible employee's workplace pension scheme. This will supplement the 4% contribution from the employee and around 1% from the Government in the form of tax relief.
The Personal Accounts Scheme
This is aimed at employees who don't have access to a quality work based pension scheme. Key features of the scheme are:-
- Occupational pension scheme – run in the best interests of its members
- Low charges
- Simplicity
There will be contribution limit of £3,600 per year (based on 2005 earning levels) and a general ban on transfers in and out the scheme, to focus the scheme on the target market.
Other measures
This act includes a number of measures designed to simplify the existing system for both state and private pensions. These include consolidation of additional State Pension and removal of rules relating to contracted - out rights. It also includes provision to enforce employer duties through a compliance regime for which the Pensions Regulator will have overall responsibility. In addition there will be extensions to the remit of the delivery authority. The Act makes a number of changes relating to the operation of the Pensions Protection Fund (PPF) including enabling PPF compensation to be shared on divorce as well as enabling individuals in the PPF with terminal illness to commute their entitlement into a lump sum. The Act enables changes to the qualifying conditions for the Financial Assistance scheme (FAS). Data can be shared between the DWP and energy suppliers to enable them to better target the assistance provided to individuals receiving Pension Credit. The Act allows certain people to buy up to an additional six years of voluntary Class 3 National Insurance contributions (NICs). This is over and above those permitted under the current time limits, in order to enhance their basic State Pension entitlement. The new rules came into effect from 6 April 2009.