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What auto-enrolment pension reforms mean for businesses in Leeds

As the result of an independent review, a new scheme given the go-ahead in order to address a number of issues regarding UK pensions is now under way.

The National Employment Savings Trust (NEST), a government-backed initiative, has been created with the intention of reducing the strain on the state pension system by requiring businesses to begin enrolling all of their employees into a high-quality pension scheme.

In terms of demographics, the life expectancy for the average Briton is on the increase. As a result, the current state pension system is unsustainable, prompting changes in government legislation to ensure that all people of pensionable age can be adequately provided for in the future.

As of October of last year, employers must now ensure that their employees are part of a Qualifying Workplace Pension Scheme, provided they do not already have their own policy. This ruling is being phased in over the course of six years, becoming mandatory in October 2018.

The new law applies to every employee aged between 22 and retirement age whose income exceeds £8,105 per calendar year, and will undoubtedly affect a large number of small-medium sized businesses in and around Leeds, dependent on a number of factors, including which sectors they operate in.

For example, a restaurant or bar located in the city centre with a large catchment of students might employ a number of students on a part-time basis. Since the majority of students in the city are aged between 18 and 21, such businesses would be largely exempt from auto-enrolment on behalf of these employees.

The types of businesses more likely to be directly affected by the changes include (amongst others) taxi firms and small retail companies based in and around the outskirts of Leeds, the owners of which might choose to use NEST in regard to employee contributions. Essentially, any company with employees over 22 who work full-time or otherwise earn the equivalent of a full-time weekly minimum wage will be required to auto-enrol their employees into a QWPS.

Despite these new laws, employers still have a number of reasons to look towards making use of alternative private schemes. Clayton Holmes Naisbitt is a financial consultancy that can provide further information on auto-enrolment, and how businesses in Leeds might benefit from choosing a private-sector solution. For more information on how Clayton Holmes Naisbitt can help your business, click here.