Key Points:
• The Personal Accounts scheme is a pension scheme which all employers and employees (unless exempt) must contribute to.  Personal Accounts are to be introduced in October 2012. 
• Personal Accounts will apply to workers who ordinarily work in Great Britain, are aged between 16 and 75 and are in receipt of relevant earnings from their employer.  For the purpose of the scheme, these workers will be referred to as jobholders. 
• All jobholders aged between 22 and the State Retirement Age must be automatically enrolled into the scheme (or a qualifying alternative arrangement) by the employer on the first day of their employment.  If a jobholder opts-out, the employer must automatically re-enrol the jobholder after 3 years have passed.
• Contributions to the scheme are based on qualifying earnings over a pre determined pay reference period (such as a tax year).  The qualifying earnings are total earnings (bonuses, overtime etc. included) between £5035 and £33540 (2006/2007 terms).   The level of qualifying earnings will be reviewed each tax year. 
• The Government has proposed staged joining, with the largest employers starting to participate from year 1 – 2012 - through to the smallest employers starting to contribute in year 3 - 2014. 
• Jobholders will contribute 5% (less tax relief) and employers will contribute 3% of qualifying earnings.  It is proposed that the contributions will be phased in as detailed below:

o Year 1-3: employer contributes 1%, jobholder contributes 1%
o Year 4: employer contributes 2%, jobholder contributes 3%
o Year 5: employer contributes 3%, jobholder contributes 5%

The bottom line – if you don’t pay at least 3% towards your employee’s pensions this will be a significant extra cost. Planning will help you to reduce this. (Yes, we have some cunning ideas).

The offer? 
For a free analysis of your existing pension arrangements and how these changes could impact your organisation, plus our ideas about how you can plan ahead,   please feel contact Christine at christine@hradvantage.co.uk or on 01494 478801 to make the necessary arrangements