The impact on the UK’s economic landscape is clearly going to become even more significant, while the impact on retirement planning is also one to contend with. ONS data highlights another key factor that is a 29% increase in the number of working women aged 60 to 64.

More and more people are working up to and beyond state pension age, with a phased out retirement becoming ever more common than a solid, pre-defined finish date. This all makes the retirement planning challenge potentially more complex, but solutions are evolving to respond to the changing landscape.

From Old Age Dependency to Active Dependency

New government measures are also needed to deal with the changing economics, but this is not as easy as it sounds. One suggestion from the ONS is to utilise the Active Dependency Ratio (ADR) instead of the traditional Old Age Dependency Ratio which is fast becoming outdated and irrelevant.

The ADR has a ratio approximately double the size of the OADR because it includes people of working age who are economically inactive, and people of pensionable age who are economically active (the former figure being much higher).

Instead of projecting increasing levels of economic dependency in the future like the OADR, the ADR considers projected increases in economic activity levels at older ages in the future and also evaluates the economically inactive population.

But the ADR comes with a number of instant barriers and fresh challenges. It takes economic activity by age into account, but as economic activity often does not translate to economic independence, this makes it difficult to access and quantify any solid data.

Such active individuals may still be dependent, e.g. those working part-time beyond the State Pension age may still be receiving benefits. This adds an extra dimension and level of complexity to the data.

A Changing Retirement Provision

This changing economic landscape makes one thing very clear – there is no longer any long-term certainty when it comes to retirement planning.

With an increased burden on the State Pension, those approaching retirement cannot rely wholly on the state to support them. The ONS are stepping up pressure to increase the state pension age in 2039, seven years earlier than planned, but we have yet to see whether this will take place and the potential consequences. In the meantime, retirees need to start making their own provisions if they wish to enjoy a good standard of living in their later lives.

Many of us are adopting a transitional approach to retirement and there are many factors that may impact the direction in which retirement planning takes. As the background remains so unpredictable and the transition between work and retirement continues to grow more fluid, the ADR may prove more useful in inspiring solutions. But we are nowhere near a solid framework just yet.

In Sickness and in Health

While increased life expectancies can only be a good thing, living longer also means that more funds are required to fund our lifestyles. It also brings with an unfortunate reality that more people will need social care in later life. This means either relying on family members or, more commonly, finding the funds for full-time nursing and social care either at home or in a facility.

The costs can ramp up quickly even when the retiree is well enough to spend time at home, with additional requirements typically including panic buttons and home modifications such as stairlifts.

Research also shows that people in the UK are far more tied to their homes than those in other countries, which means selling their property to fund care would often be a last resort. This attitude also needs to be taken into consideration when the government looks at social care funding expectations and saver incentives.

The government’s highly-anticipated social care green paper is yet to materialise which further supports the argument that retirees need to determine their own solutions instead of holding out in the hope for a solution to present itself.

The ONS predicts that economic activity will increase most among those aged 60 to 69 years but warns against key factors that may influence this projection, such as the value of the State Pension and changing attitudes to work.

As it stands, no reliable projections can really be made, and every individual should make their own plan designed to cover potentially high costs during the retirement years. And it’s not only about when things go wrong.

Retirement is the time that many of us will fulfil lifelong dreams, such as travelling, buying a second home abroad or completing extensive home improvements. The last thing any of us need after years of working is to struggle to make ends meet during a time when we deserve to enjoy ourselves.

We also cannot emphasise enough how important it is to start planning for retirement early. Personal debt has become worse in recent years and the pattern by which younger people are choosing to purchase a property, start a family and retire later is all putting increasing pressure on savings models.

It’s essential to assess your protection needs and the resilience of your portfolio on a regular basis to protect against income shocks and benefit the most from your savings efforts.

Through our group of companies, we offer advice and support on all aspects of retirement planning. Our specialist team at Vintage Corporate are expert arrangers of employee benefits packages. Automatic enrolment is a key component whereby we advise employers on how to roll out the most effective pension scheme for their workplace, helping every individual to stay on track with their retirement goals. For further advice and support, contact our specialist team.

For advice and support on all aspects of retirement planning for individuals, contact our financial protection specialists at Vintage Wealth Management. We will help you to build a personal life cash flow model including a range of visual “what if” scenarios, designed to determine how long your savings will last and ensure that you’re best prepared for anything that life has to offer. Contact the team via email at info@vintagewealth.co.uk or give us a call on 020 8371 3111.

The post The Impact of our Ageing Population on Retirement Planning first appeared on Vintage Corporate Limited.

Your Money reports that three quarters of employees are now saving for their retirement and that workplace pension contributions have increased particularly among younger and lower paid workers. This just goes to show that employees are recognising the value of retirement planning and taking advantage of the options available.

Changing Faces

While auto enrolment has set rules that apply across all types of industry, we’d like to use this post to address the topic of auto enrolment for restaurants. The hospitality business is notorious for its high turnover which is one of the key reasons that restaurants that have a major challenge when it comes to fulfilling stringent requirements. Temporary staff, shift workers and different pay dates can all confuse matters but how does this translate into employer duties?

Whether you’re a small B&B owner or the Managing Director of a national hotel corporation, your employees will need to be registered into a workplace pension. Size is irrelevant when it comes to auto enrolment and if you employed any member of staff for the first time on or after 1 October 2017, you will need to provide them with a workplace pension from their very first day of employment. Eligible employees are those aged over 22 who earn more than £10,000 a year and have not yet reached pensionable age. They must also ordinarily work in the UK.

Auto enrolment comes with a hefty amount of admin because the eligibility criteria outlined above must be assessed at every pay cycle to keep up to date with your individual staff members. For example, an employee may have a pay rise that takes them above the £10,000 threshold or they may celebrate their 22^nd birthday and become eligible for the workplace pension. Good payroll software and professional advice will help you to stay on track with your duties.

A Collective Income

One area which can cause confusion is when your restaurant employees work multiple jobs, from which they collectively earn more than £10,000 a year. Auto enrolment rules state that this £10,000+ per year income must come from a single employer, which means that if you’re paying any part-time or temporary member of staff less than that, then you have no duty to the individual under auto enrolment.

While Scottish Widows report that almost two million workers are missing out on pension contributions due to this rule, it can also cause miscommunication whereby employees may believe they are entitled to a workplace pension due to their overall earnings and the fact that their multi-job set-up seems them working full-time hours. This is not the case and it’s important for employers to be informed about the fact.

The Question of Overtime

It’s a fact of life that many restaurant workers will find themselves working overtime on a frequent or occasional basis. So how does this factor into auto enrolment duties? There are set minimum contributions that both employer and employee must pay which apply to anything earned over £6,032 up to a limit of £46,350 (tax year 2018/2019).

This figure includes both overtime and bonus payments which is why it’s crucial to keep strict records of the overtime hours worked and any bonuses due to each individual employee to make sure that no-one misses out or pays incorrect contributions.

What about Temporary Staff?

Many restaurant employees are seasonal workers or temporary staff. While it might seem as if you would not need to join such individuals up to auto enrolment, this may not be the case. Temporary staff members will make the process more complicated as you will need to consider fluctuating hours and earnings, as well as consider staff who may join or leave in the middle of pay periods.

Implementing a solid payroll software system will help to calculate contributions and assess every member of staff at each pay cycle, but it’s still important for you to know your duties. The same general rules apply to temp staff as permanent workers, i.e. any staff that are aged between 22 to State Pension Age and earn over £192 a week, or £833 a month, must be put into a pension scheme which you must pay into. And if you employ family members in the restaurant, the same rules apply.

Postponement, Joining and Opting In

However, if you know that any employee will be working for you for less than three months, you can choose the “postponement” option. This means you can delay working out who to put into a pension scheme as long as you write to the individual member of staff to explain the process within six weeks from the date after postponement starts.

If any temporary staff member asks to be put into a pension scheme during the postponement period, they must do so in writing to their employer. Should their age and earnings fulfil the criteria, then you – as an employer – must opt the individual into the scheme within a month of receiving the request.

In the case where a staff member is earning £6,032 or less per year, then the workplace pension scheme that you enrol them into does not need to be the same as the one you use for employees. You are also not required to pay an employer contribution.

A Tronc PAYE Scheme and the Impact of Auto Enrolment

There is always the possibility that your restaurant is the exception to the auto enrolment rule. For example, where a restaurant has in place a Tronc PAYE Scheme managed by a Troncmaster and compliant with HMRC guidelines, all earnings paid through this PAYE scheme (tips and gratuities) are not impacted by the auto enrolment legislation.

As such, the restaurant will not have any auto enrolment duties in respect of the Tronc PAYE Scheme. However, there is a requirement to notify The Pensions Regulator that this is the case so that their records can be amended.

For more advice, information and support on any aspect of auto enrolment, contact the team at Vintage Corporate on 020 8371 5232 or email info@vintagecorporate.co.uk

The post Pensions Auto Enrolment for Restaurants first appeared on Vintage Corporate Limited.