Nest Pension Reforms Impact Pension Losses

Nest Pension Reforms Impact Pension LossesThe governments recent pension reforms are going to have an impact on the way that forensic accountants calculation pension losses.

This week the government has agreed that all UK businesses, regardless of size, should offer a company pension scheme or enrol their staff into the new National Employment Savings Trust (Nest).

Nest is due to start next year, with all firms joining by September 2016.

The government says it will mean that between four million and eight million workers will start to save in a pension scheme for the first time.

To be eligible for automatic enrolment, staff will have to earn at least £7,475 a year.

The principle of automatic enrolment of employees into pension schemes was established in the Pensions Act (2008), which set out reforms designed to make saving for retirement the norm among employees.

The key feature was that all employers should provide an adequate pension scheme for their eligible employees.

Typically, that means staff who are aged 22 or more and currently earning more than £7,475 a year – the personal allowance for income tax.

If such a scheme is not provided, then the staff will have to be automatically enrolled in Nest instead.

Employers and employees will also have to make a minimum level of contributions, eventually amounting to 8% of income a year.

Nest is due to start next year, with automatic enrolment starting in October 2012, with the largest employers joining first and the smallest joining by September 2016.

Contributions from staff and employers will also be phased in.

This is going to have a major impact on the way that forensic accountants calculate pension loss claims.  Claimants who have left an employer offering a final salary pension scheme as a result of an accident, and join a new employer not currently offering a final salary pension scheme will have to give credit to take into account that by 2016 all employers will have to offer a pension scheme.

At Frenkels Forensics we are able to deal with all financial aspects of pension losses arising from final salary pension schemes and money purchase pension schemes including the impact of the Nest pension reforms.  For more information please contact John Frenkel or Vitek Frenkel on 020 8457 2929.


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