Auto enrollment pension

[Lewis]

My wife and I both work full time for our Ltd company (which is a mixture of traditional contracting and a web based product) and we both have Hargreaves Landsdown SIPPs. Because I am the only Director, the company has an obligation to auto-enroll her. HL say their SIPPs are not compliant, but they could setup a compliant group policy for a £1,500 charge.

We have two options as I see it (a) she becomes a Director, or (b) we find a compliant pension and switch her over to that.

What are other people doing? Has anyone found a good compliant pension? Can she choose to waive her auto-enrollment rights? We're tempted to do (a).

[TheFaQQer]

AIUI, even if she were to waive her rights, you still have to have a pension plan in place because she could change her mind. I'd also think that you can't get round it by making her a director - if she is working for you now, then there must be an employment contract in place, and the question the pensions regulator asks (or certainly used to ask!) is to confirm that there are only directors with no employment contracts.

If you need one, you'll probably be better off using NEST (NEST home | UK workplace pension scheme | NEST Pensions) as that looks a lot cheaper than £1500 to set up. My IFA told me that NEST would be cheaper than the pension he provides

[Lewis]

AIUI, even if she were to waive her rights, you still have to have a pension plan in place because she could change her mind. I'd also think that you can't get round it by making her a director - if she is working for you now, then there must be an employment contract in place, and the question the pensions regulator asks (or certainly used to ask!) is to confirm that there are only directors with no employment contracts.

If you need one, you'll probably be better off using NEST (NEST home | UK workplace pension scheme | NEST Pensions) as that looks a lot cheaper than £1500 to set up. My IFA told me that NEST would be cheaper than the pension he provides

Thanks, I'll look into NEST.

It says this on the pension regulator's site, under the husband and wife section:

If you are both directors:

The company will have automatic enrolment duties for both of you if both of you have employment contracts.
The company won’t have any automatic enrolment duties if only one of you has an employment contract, or neither of you has.

Automatic enrolment enquiries | The Pensions Regulator

As I don't have an employment contract is doesn't matter if she does or doesn't.

[Lewis]

NEST's charges:

an annual management charge (AMC) of 0.3 per cent on the total value of a member’s fund each year
a contribution charge of 1.8 per cent on each new contribution into a member’s retirement pot

I can see who's going to be the winner of this government initiative!

[northernladuk]

As I don't have an employment contract is doesn't matter if she does or doesn't.

She does work for you and she expects to get paid for it. Surely you have an implied contract which is a contract?

[TheFaQQer]

As I don't have an employment contract is doesn't matter if she does or doesn't.

In that case, make her a director and let them know the situation - you can do it by email, letter or via the website.

[Lewis]

She does work for you and she expects to get paid for it. Surely you have an implied contract which is a contract?

It doesn't matter if she does or doesn't, because I don't (in the context of auto-enrollment obligations).

The company won’t have any automatic enrolment duties if only one of you has an employment contract, or neither of you has.

But yes, am thinking her being a Director makes most sense all things considered, not just for auto enrollment but for the business in general.

[NigelJK]

Due to the changes in the Dividend rules you might find it more tax efficient to have her as a Director and pay via Dividends.

[TheFaQQer]

Due to the changes in the Dividend rules you might find it more tax efficient to have her as a Director and pay via Dividends.

Why would you need to be a director to receive dividends?

[TheFaQQer]

But yes, am thinking her being a Director makes most sense all things considered, not just for auto enrollment but for the business in general.

Under the current rules (which are a moveable feast), if she is an officer of the company then she could claim ER if you close the company down and take the money via an MVL. If she's not a director then she won't be able to do that.