It is estimated that around seven million people are not saving enough to meet their retirement aspirations and, as such, has put changes in place which commenced from October 2012 and affect both employers and employees.
Since 2012, businesses have been required to automatically enrol all 'eligible jobholders' into a qualifying workplace pension. There is a total minimum contribution, of which a minimum amount must be paid by the employer. The employer could therefore meet the full contribution for an employee or make the minimum contribution permitted, with the employee making up the difference to meet the total minimum level. The process is being staged, dependent on employee head count, from 1st October 2012 to 1st February 2018, with large businesses being the first to have to take action.
Every business has a 'staging date', which is the date when their automatic enrolment duties come into force. You can find out your staging date by clicking here and entering your PAYE reference into the tool.
A Self Invested Personal Pension (SIPP) is a tax-efficient wrapper within which a wide range of investments can be held. SIPPs have the same tax benefits and regulations as conventional personal pension plans but have a much wider investment choice than a standard personal pension. It can be used to invest in funds that invest in Gold Bullion, to access Discretionary Fund Management or even purchase commercial premises. The assets held in the SIPP can therefore be tailored to suit your circumstances, making each SIPP unique.
A SIPP can be grouped together to create a Group Self Invested Personal Pension (GSIPP), where it can make joint investments, most commonly to purchase a commercial property. This allows members to pool their pension funds to purchase properties that they may not be able to buy individually. Each member has their own individual SIPP which allows them to invest independently, in addition to the pooled fund for the joint investment. This can be particularly useful when members may have different attitudes to risk and want to consider different investment strategies.
A SIPP also has the ability to borrow up to a maximum of 50% of net value of the SIPP. This is most commonly used to fund a property purchase, but can be used for any purpose.
A Small Self-Administered Scheme (SSAS) is an occupational pension scheme set up under trust with fewer than 12 members.
The majority of schemes are set up for the executives of director-controlled companies, and as many such companies are family businesses, the members of the scheme are frequently related. However, since 6th April 2006, there has been no necessity for all members of the scheme to be employed by the same company, provided the scheme is originally established by a company for the benefit of one of its employees. This means that the directors of a company who are in a SSAS can enrol other family members in the scheme irrespective of their employment status. It is also possible for a partnership to establish a SSAS for one of its employees (perhaps a relative of a partner) and for partners to subsequently join.
Each SSAS is written under its own individual trust, which means it can be tailored to the specific needs of the members (within HMRC rules). Assets are not earmarked within the scheme, which means that if one member wishes to take benefits or to transfer out, then they can be taken from any of the assets in the scheme. This is different to the GSIPP arrangement where members will own a set proportion of all assets in the arrangement, therefore if someone wanted to leave or take benefits, the other members would effectively have to 'buy them out', or assets would need to be sold.
Like the SIPP as detailed above, the SSAS can borrow up to 50% of the net scheme assets. In addition to this, the SSAS can also make a loan of up to 50% of net scheme assets back to the sponsoring or participating employer, provided certain conditions are met.
To discuss your financial planning requirements or to obtain further information about our services and how we could help you, please contact Antonine Investment Managers, telephone 01324 478 248 or email: firstname.lastname@example.org We look forward to hearing from you.