Employers want auto-enrolment contribution increase

More than three quarters of employers think that auto-enrolment pension contributions should be increased, according to research by Jelf Employee Benefits.

Employers operating auto-enrolment workplace pension schemes are required by law to pay a minimum of 1% into employees’ pension pots. This is due to rise to 2% from 1 October 2017 and 3% from 1 October 2018.

However, the research reveals that the majority of employers think this should rise further. The survey of 200 HR and finance experts found that 76% want minimum contribution rates to increase. Just 15% thought that no increase was needed.

The research found:

  • 85% of respondents said employers should bear part or all of the contribution increases
  • 14% thought employees should pay for increased contributions
  • 4 in 10 said they would raise contributions ahead of legislated increases to spread the cost over several years.

Steve Herbert, head of benefits strategy at Jelf, said:

“Frankly, we were a little surprised at these results. Many employers are yet to reach their staging date for auto-enrolment, and a significant proportion of those who have already staged are not yet at the full contribution rate. It is therefore somewhat surprising that employers appear so supportive about a further increase to their pension contribution costs already.”

Auto-enrolment minimum contribution schedule

Employer’s staging date

Employer minimum contribution Total minimum contribution
To 30 September 2017

1%

2%

1 October 2017 to 30 September 2018

2%

5%

1 October 2018 onwards

3%

8%

Contact us today to discuss what the workplace pension reforms mean for you and your business.

Childcare most costly aspect of raising children

Raising a child costs parents around £35,000 in the first 5 years of its life, research by Aviva has found.

The survey of more than 2,000 parents with children aged between 0-5 shows they spend an average of £7,026 a year on their child.

This works out at £586 a month and a total of £35,000 by the time they reach their fifth birthday.

The study reveals the most costly expenses associated with raising a child:

  • childcare has the biggest impact on parents’ wallets, costing an average £95 a month or £1,140 a year
  • parents spend £62.30 each month or£747.60 every year on equipment
  • clothes cost £58 every month or £696 each year.

The research also shows that many parents are planning for their children’s financial futures:

  • 52% have set up a savings account in their children’s names
  • 37% have opened a Junior ISA or child trust fund
  • 8% have begun saving for a house deposit for their children
  • 8% have started saving into a university fund.

Louise Colley, protection director for Aviva, said:

“As every parent knows having children can be an expensive business, but it’s incredible to see how this stacks up over the years! This is why it’s so important for parents to consider how they might cover the cost of raising a child if they were to unexpectedly lose an income through illness or even worse, bereavement.”

Are you planning to start a family? Contact us today for financial advice.

Directors call for fiscal discipline

The majority of company directors want the government to press ahead and achieve a budget surplus by the end of the parliament, an Institute of Directors (IoD) member survey has found.

Members of the IoD have listed their top priorities for the new government, which include a reduction of the deficit, increased spending on infrastructure and the lowering of taxes for businesses and individuals.

A majority of 85% support the government’s goal of eliminating the budget deficit by 2020. 12% of respondents want to achieve this entirely through spending cuts while just 1% said tax rises should be the only means of getting the deficit down. A fifth thought an equal mixture of spending and tax rises would be the preferable way of achieving a surplus.

Of the 1,211 IoD members surveyed:

  • more than half opposed a rise in national insurance, income tax and business rates
  • 56% want the government to invest in the country’s broadband infrastructure
  • 55% said there should be more investment in energy generation
  • many want the government to spend more on developing transport infrastructure: railways (50%), roads (44%) and airports (34%)
  • 89% support a crackdown on tax avoidance.

Simon Walker, director general of the IoD, called on the government to stick to its pre-election plans to reduce spending:

“Returning the budget to surplus must be the overriding goal in this parliament, but businesses want the emphasis to be on finding further reductions in spending, not significantly raising taxes.

“If we do not even begin to deal with the pile of debt, the situation will only be more dangerous if we encounter another economic shock.”

Walker also urged the government to implement “much more fundamental [tax] reforms”:

“A hugely complex tax code also remains a barrier to growth for many businesses.

“Businesses want national insurance brought down, business rates reformed and a tax code which encourages investment and entrepreneurialism. This will not be achieved by tinkering at the edges.”

We can help you plan for your business’s future. Speak to one of our expert advisers today.

Saving picks up among UK households

More than two thirds of people in the UK have managed to save over the past 12 months, according to research by Lloyds Bank.

The latest Savings Report reveals that people are feeling increasingly confident in their financial positions and are boosting the amount they are saving as a result.

In the first quarter of 2015 almost 7 in 10 people said they have saved regularly over the past 12 months, up 5% from Q4 2014.

Of the 6,210 people surveyed:

  • 44% saved at least once a month during Q1 2015, up from 37% in Q4 2014
  • 23% have more than 4 times their monthly household income in savings
  • 18% have saved more than £500 in the last month and 9% have save more than £1,000.

Philip Robinson, savings director for Lloyds Bank, said:

“For people who may not be as confident with their current savings habits, it’s important to try and save a small and regular amount each month. This can help to build a strong savings pot over time, which can be increased as circumstances improve.”

Contact us today to discuss your savings options.

Business secretary announces Enterprise Bill

A new Enterprise Bill designed to reduce regulation on businesses by at least £10 billion over the next 5 years has been announced by Business Secretary Sajid Javid.

In his first speech at the head of the Department for Business, Innovation and Skills, Javid announced a host of radical regulatory changes and committed them to the first Queen’s Speech of the parliament on 27th May.

The Enterprise Bill will target independent regulators for the first time, who will be asked to contribute significantly to the target of at least £10 billion in regulatory cuts.

The bill will allow for the creation of a Small Business Conciliation Service that will settle disputes between small and large companies over issues such as late payment.

It will also extend and simplify the Primary Authority system, which allows local authorities to provide businesses with regulatory advice. Under Primary Authority rules, advice given by a local council must be followed by all other councils, preventing businesses from having to comply with different rules.

Business Secretary Sajid Javid said the bill will “sweep away burdensome red tape” and remove “heavy handed” regulators from the backs of small businesses.

Business Minister Anna Soubry added:

“We will be asking businesses for evidence in the coming weeks and months. We want them to be our partners in identifying and scrapping needless burdens at home and in Europe.”

Responding to the government’s announcement, Katja Hall, CBI deputy director-general, said:

“Businesses will welcome the government getting back out of the blocks early by following through on its commitment to cut red tape.”

Contact us today to discuss your business planning.