Asleep at the wheel on net pay – and they want to drive the bus!

asleep at the wheel

The PLSA are making a fuss about SMEs. Small Business Saturday tells me that my small business can get its help – and it’s just round the corner!

But I am not convinced, since the launch of Pension Solutions, its online service to help companies staging from 2016 make wise pension decisions, the PLSA has been absent from the auto-enrolment debate.

The PLSA’s Graham Vidler is threatening to come to the Pension PlayPen lunch (Monday 7th December-Counting house – 12 for 12.30), where we are putting NEST on trial – and we may get some more out of them then, but what I really want to know, is what it is doing to solve the problem of NET PAY.

Nobody knows how many people are currently auto-enrolled into a workplace pension and getting no tax relief and nobody seems to care. Except  that is for Ros Altmann and some people at NOW and me. Well that’s not fair, it’s a big issue for Friends of Auto-Enrolment, but let’s face it, we’re not Paul Lewis!

It really is high time that Pension and Lifetime Savings Association (that’s the NAPF that was) put out some guidance to their members on what the problem is, how to diagnose if your staff are impacted and how to put matters right.

After all, the vast majority of the people in NET PAY DC schemes are in schemes run by the PLSA’s membership.

And it’s high time that the ICAEW did something about alerting its members to the problem. I’ve read their “How to choose a pension” document and while it makes accountants aware of the difference between a contract based plan and a trust based plan, it makes no reference to the perils of NET PAY for the low paid.

If ever there was an accident waiting to happen, it is with NET PAY. If I was a union man, I’d be sharpening up my litigatory quill in anticipation! How great it will be to run class actions against large employers who have denied the low paid tax relief they would have received if those employers had paid attention to the pension!

Truly , the large DC schemes are asleep at the wheel and so are the consultants who advise them. The Trustees are untrustworthy and the employers unconcerned. The trade body is silent and this whole conspiracy of silence is being played out against the biggest induction of the poor and vulnerable into funded pensions , this country has ever seen.

If you want to hear the PLSA on tax – try the pension tax-relief myth buster – nothing here on the net pay issue. Though there is a section on how far the current pension taxation system to those on low earnings!!!

If you want to hear the PLSA on helping small business’ understand workplace pensions, read here, there’s nothing on the perils of net pay for those on low earnings.

Best of all, if you’re a small business you’ll be pleased to know you’ve just missed the opportunity to save 70% of the £49 subscription cost  for www.pensionsolution.co.uk because you missed Jo Seagers’ blog on #smallbusinesssaturdayuk

Small businesses have homes – the Federation of Small Businesses for a start. To be relevant on pensions , the PLSA is going to have to campaign on the issues that matter and help SMEs with the tricky things like tax relief. To be fair, the Pension Solutions factsheets do tell you which of the schemes you are looking at are net pay and which aren’t, but why pay the PLSA anything for something everyone should know for free.

So if you want to be told which mastertrusts operate on net pay – they all do -with the exception of NEST which operates on Relief at Source and People’s Pension and Supertrust which operate on both NET PAY and Relief at Source. All group personal pensions operate on relief at source (including SIPPs). All single employer occupational schemes are net pay (unless they tell you they have changed).

Now then PLSA – having saved SMEs the trouble of 70% of £49 + VAT to work out which schemes are and aren’t NET PAY, how about you join Adrian Boulding and NOW in working on a solution to the NET PAY problem – and endorse what we have been doing on this blog. After all – Adrian is also head of PQM , which happily accredits net pay schemes without any reference to the perilous tax status they offer the low-paid!

They might like to get out on the road with Pension PlayPen and meet some of these small businesses. They might even respect the small businesses like Systemsync and Pension PlayPen which are doing the heavy lifting – instead of playing at auto-enrolment. Oh and ignoring the members of their membership’s Workies , that are getting no tax-relief on their contributions.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in napf, NEST, pension playpen, pensions, PLSA and tagged , , , , , , . Bookmark the permalink.

1 Response to Asleep at the wheel on net pay – and they want to drive the bus!

  1. bobchampion says:

    Henry,
    Its not only those not getting tax relief on their contributions. Those who enter retirement may be advised to take small pension funds in two or three instalments over the same number of tax years so that they pay no income tax. If they took the whole fund in one go they would pay income tax.

    It would be interesting to know how many schemes facilitate such an arrangement for those who do not have enough to enter drawdown, or for whom an annuity provides a meaningless income.

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