B&CE, provider of financial benefits (including pensions) to the construction industry and allied trades, today called on the industry to start making provisions for the forthcoming pension reform, set to come into effect (on a staged basis) from 1st October 2012.
This date signals the start of the government’s new compulsory employer duties, which require all employers to automatically enrol all eligible employees into a qualifying pension arrangement, such as B&CE’s workplace pension EasyBuild, as well as make contributions towards it.
What does this mean financially to the construction industry?
It is estimated that over 1.2 million people working in the construction industry will be enrolled into a workplace pension. This will potentially have a significant financial impact on the industry and is an unprecedented amount of money for many employers to have to realise. Based on the current average weekly wage of £532, the sector could be looking at contributions reaching around £390m by 2016 and rising to as much as £1.17bn by 2018 (contributions increasing from 1% to 3% over three years.)
The changes are being implemented from October 2012 over a period known as staging (based on the size of your workforce) and by September 2016 all employers will be legally required to:
1. Enrol their employees automatically into a qualifying workplace pension scheme such as EasyBuild
2. Pay a minimum contribution of 1% of band earnings into this scheme from their staging date, rising to 3% from September 2017
3. Keep records relating to pension arrangements, the enrolment of members, salary and contribution histories and members’ opt out and opt in notices
4. Every three years automatically re-enrol employees who choose to opt out
Patrick Heath-Lay, Director of Finance & Customer Development at B&CE commented: “Whilst for some, the auto-enrolment process may seem some way off, putting a strategy in place now will allow you to decide how best to implement the new employer duties and manage not only the financial but also the administrative impact it is going to have on you and your workforce. Businesses are going to see a significant shift in outgoings and need to be preparing for this now. Given the detailed and complex nature of the changes, particularly the compliance obligations, the industry cannot afford to underestimate the impact. Now more than ever, it will be critical employers work in partnership with their pension provider and start planning early. This is something we at B&CE are doing with our customers, as we understand the complexities of auto-enrolment and indeed the construction industry. Our aim is to take the hassle away for our customers by removing as many of the administrative headaches that this ongoing process will create.”
Patrick Heath-Lay continues: “We are working with our customers to implement ways that the extra costs can be mitigated. Measures such as salary sacrifice can achieve this, and will probably remain effective even if we do see a longer term merger of income tax and NI that was heralded in Wednesday’s Budget speech.”
Details of the new employer duties, how and when it will affect your business as well details of B&CE’s solutions focused approach to construction workplace pensions and its EasyBuild scheme are available at: www.bandce.co.uk or by calling: 08457 414142.
About B&CE
Since 1942, B&CE has provided financial welfare benefits to those working within the construction industry and their dependants. Today it manages assets of over £1.7 billion and provides financial benefits to more than 209,000 operatives on behalf of over 6,400 construction employers.
B&CE’s current product offering includes a workplace pension EasyBuild, employee accident cover, employee life cover, employee healthcare and holiday pay. B&CE’s workplace pension EasyBuild is a Group Stakeholder Pensions Scheme. Designed for the construction industry it is the largest in the UK with over 500,000 members and £670 million under management.
The above information is correct as at end December 2010.
For further information, please contact:
Susanna Gale or Hannah Gilmore at Living PR.
Tel: 020 7739 8899 or email hannah.gilmore@living-group.com