01 Mar 2019
Plumbing businesses and their employees have been advised to investigate alternative pension arrangements following the decision by the Plumbing and Mechanical Services (UK) Industry Pension Scheme to close to future accruals from 30th June 2019.
Closing to future accruals will not solve the issue of the Scheme and potential liability of employers, but it does stop the build-up of future benefits and the associated liability.
Employees will not build up any further benefits or pay any further contributions to the scheme after June 30th 2019. No new members will be able to join the scheme.
The closure is likely to have a significant impact for both employers and employees, with new pension arrangements requiring to be put in place.
The Scheme will close to future accrual no sooner than 30th June 2019. Scheme benefits already built up to the point of closure are protected by law and by the Scheme’s rules.
Employers will require to source a new scheme and currently in excess of 360 businesses will need help. Auto enrolment rules will govern how employers will deal with this and in many cases it will be a new situation for a firm.
The other key point is that employers will now have to act individually as opposed to having the convenience of being part of a big scheme. Employers will also need to provide replacement life cover of 3 x salary.
As an employer, you must give your employees sufficient information to help them understand how their pension benefits might change. The consultation period with employees must be completed by 31 March 2019.
Aberdein Considine Corporate Benefits Director, Peter Mutch said: "This is a very serious situation, with major implications for both employers and employees.
"Employers, many of whom may not have had to deal with this process before will need to get themselves fully up to speed with the auto-enrolment rules and regulations.
"Getting it wrong can be extremely damaging for a business, financially and reputationally, and a lack of knowledge is unlikely to be viewed sympathetically by the Pensions Regulator.
"Your employees are relying on you to get it right, so if you’re not sure what you need to do, the simple answer is get advice, and get it quickly."
We can provide an easy-to-manage workplace pension scheme for plumbing businesses of all sizes, along with the required life insurance scheme.
As independent advisers we work with a variety of providers who have developed a range of tools and support material to help you meet your employer duties both now and in the future.
Introducing a new scheme poses a considerable challenge to your business. You’ll need to introduce a range of new processes, record keeping and reporting requirements to comply with your employer duties, so advanced planning is vital.
The quicker you act the more time you’ll have to consider your options and adopt the most appropriate strategy for your business. While it’s likely your operational costs will rise, the decisions you make now will help you to manage these costs.
We want to work with you and your employees to help you understand and prepare for the changes you will have to make.
If you would like to speak to one of our experts about workplace pensions, call Peter Mutch on 01224 560741 or fill out the contact form below.