More Pension costs ahead for us - have you heard about the latest changes?

Beware - pension reforms on the horizon

There have been various articles in the press recently about yet another change to the current pension regime. This applies to every employer - not just Eastbourne employers.

Currently there is a two tier state pension scheme – a basic state pension and a second state pension.

Basically the second state pension is an additional earnings related pension provided as a top up to the state pension for those with lower earnings.

From April 2016 this will be replaced by a single tier pension. 

Both private and public sector workers look set to lose out under these changes.

Private sector workers currently eligible for the second state pension will now get less when they retire. Those retiring soon after the changes should not lose out – but those retiring in the future could lose up to £40 per week.(Presumably the assumption is that the gap will be met by the new auto enrolment in workplace pensions?!)

Public sector workers – especially those in the NHS – will also be affected by the changes.

Currently those who are members of the NHS pension scheme ‘opt out’ of the second state pension contributions because the NHS pension should provide a pension in excess of the second state pension.

Under the new regime it will no longer be possible to opt out. NHS employees will therefore have to pay increased contributions.

Additionally NHS employers such as doctor’s surgeries will have to fund increased employers national insurance contributions. Although this should only amount to 1-2% of staff costs this will have to be found from their already tightening budgets.

If you would like any further details please contact us.

Clare King 

 

 

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