May 24-30, 201026 Money Matters United Kingdom Edition Dental business is their business An ASPD member has: ■ An unprecedented track record working with the dental profession throughout the UK ■ A true and expert understanding of all current issues within NHS and Private Dentistry ■■ All members enjoy an enviable reputation as being some of the best Providers within their specialist areas I n 1901, there were 10 peo- ple of working age for every pensioner. In 2005, this was a ratio of four to one, and it is predicted that by 2050, it will be two to one. The Government is concerned that a large propor- tion of the population is not sav- ing for retirement either at all or in amounts large enough to pro- vide for the longer lifespan seen after 65. As a result, the Government has had to act to increase ac- cess to pensions – the outcome is workplace pension reform of substantial proportions. The re- forms contained in The Pensions Act 2008 will be introduced in 2012, with wide-ranging impli- cations for practice owners. At the moment, the obliga- tions of employers towards work- place pension provision could be described as minimal. For those employers who employ five or more staff, the obligation is sim- ply to provide access to a stake- holder pension scheme. There is no compulsion to make any contributions to such pensions and few employees have made the effort to join such schemes. However, employers are going to have to start paying closer at- tention to the issue in light of the wide-ranging reforms the Gov- ernment is introducing over the next five years. Key measures The workplace pension reforms contained in The Pensions Act 2008 will place a duty upon employers to provide a pension scheme that meets certain cri- teria for all eligible workers, as well as making a minimum con- tribution to the scheme. Workers will be automatically enrolled, unless they opt-out, and work- ers that do not qualify, can opt-in (but the employer is not required to contribute in this case, un- less they want to). Employers will not be required to enrol into a scheme for workers who are currently members of a work- place pension scheme that meets the qualifying standards. A “worker” is defined as someone working under a con- tract or employment or any other contract by which the person agrees to perform work or serv- ices personally for the other party to the contract. (The pre- cise scope of this latter category of person has not been satisfac- torily defined by the Courts but appears to include certain self- employed persons.) The new pension measures do not apply to workers under the age of 22 as well as those who have reached pensionable age. Workers earning below a minimum amount will also not qualify. Therefore, anyone em- ploying staff above the age of 22 whose earnings fall between £5,035 and £33,540 per annum will be obliged to provide a good- quality pension scheme, or use the Government’s scheme. Adjusting to the system This is clearly going to have sig- nificant ramifications for UK dental practice owners. To help employers adjust to the new system, the reforms are going to be introduced in stages, begin- ning with large employers first. For those employers employing 120,000 staff or more, the reforms start in October 2012. Those who employ less than 50 staff will be expected to commence the re- forms in stages from 1 August 2014 to 1February 2016. There will also be a phasing- in of the contribution levels, with employers starting at one per cent in 2012, rising to two per cent in 2016 before progressing to the three per cent final level in 2017. Final details of the stag- ing and phasing will be finalised in 2010. Who is responsible? There are three bodies responsi- ble for the administration of the new scheme: the Department of Works and Pension (DWP); The Pensions Regulator (TPR); and the Personal Accounts De- livery Authority (PADA). The TPR will be responsible for maximising compliance with employer duties, while the PADA will oversee the admin- istration of the Government’s Personal Account Scheme, now known as NEST. The National Employment Savings Trust (NEST) is the workplace pension scheme be- ing launched in 2011 as a way for employees and their “low- to-moderate” earners to meet the requirements of the auto- enrolment reforms. The scheme is a trust-based occupational pension scheme, regulated by the TPR and overseen by the NEST Corporation: a non- profit organisation accountable to Parliament. What are the implications? Although the obligations for small employers set out above are some way off, anyone pre- paring any kind of business plan or costs forecast will be wise to bear in mind these reforms now. For instance, how many employ- ers will want to award pay rises in the year or even years before these reforms start? When it comes to any kind of workplace planning that involve staff costs, being fully prepared for the potential impact on the business model will avoid any unexpected shortfalls. At some point, all employ- ers are going to have to assess whether to use the Governm- ent’s NEST scheme to com- ply with their obligations, or whether an alternative, exist- ing scheme is a better option to suit the particular circumstanc- es. As ever, the sooner an em- ployer acts, the better prepared they will be and seeking profes- sional advice on such matters is always recommended. DT Changes are on the horizon when it comes to NHS pensions. Stephen Knowles explains what they are and how they will affect practice owners In light of reform About the author Stephen Knowles is a solicitor in the commercial team of Burn & Company, Solicitors, North Yorkshire, who are members of the Association of Special- ist Providers to Dentist (ASPD) ASPD member companies work together to provide comprehensive solutions, each member of the ASPD network is a dental industry specialist committed to overcoming challenges faced by den- tal professionals. For more informa- tion on the ASPD, call 0800 458 6773, visit www.aspd.co.uk or email Stephen Knowles at StephenK@burn-company. co.uk. Pension nest eggs could now be a NEST ‘This is clearly going to have significant ramifications for UK dental practice owners’

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