Employers are being encouraged to review their entire pension arrangements for staff in time for legislative changes coming into effect in April 2006.
The Finance Act 2004, which was given Royal Assent in July 2004, introduces a number of changes to the way occupational pensions are taxed.
Ken Macintyre, pensions policy analyst at the National Association of Pension Funds (NAPF), said the first step that employers should take involves getting a team together to tackle any changes. “You have to bring together all stakeholders involved such as HR, pension advisers and administrators because the new regime does give you the opportunity to redesign almost everything from scratch.”
Employment contracts need to be looked at to see what rules relating to the provision of pensions have been written into an employee’s contract. For example, some organisations specify the amount of pension contributions they will provide when they offer contracts. And if the employer changes the way it offers these pension contributions it would also need to make the necessary contract amendments.
Any planned changes to occupational pensions must take account of administrative systems. Employers should review systems to ensure they can cope.
NAPF’s Macintyre added: “But you need to integrate all the administration and HR procedures into the planning stage right from the start.”