Have your employees claimed their pensions? What business owners need to know
The issue of unclaimed pensions is a growing concern, with numerous individuals unaware of the pensions that are rightfully theirs. Recent data reveals that unclaimed pensions amount to a staggering £28,000 per person.
As an employer, you have a pivotal role to play in helping your staff claim what belongs to them.
The Pension Tracing Service estimates that there are millions of pounds in unclaimed pensions. This is money that could significantly benefit your employees in their retirement years.
Educating your staff
Knowledge is power. Start by educating your staff about the existence of unclaimed pensions and how they can go about tracing them. Encourage them to take the initiative to find out if they have any unclaimed pensions.
Offer assistance in tracing pensions by encouraging employees to use the Pension Tracing Service. This free service helps individuals locate their lost pension schemes.
You can facilitate this by providing necessary resources and creating awareness about the service.
Creating a supportive environment
Create a supportive environment where employees can openly discuss pension matters. Encourage them to share experiences and tips on how to trace unclaimed pensions.
Encouraging regular updates
Encourage your employees to regularly update their details with their pension providers. This includes changes in address, marital status, and other personal details. Regular updates will ensure that pension providers can easily reach them, reducing the chances of unclaimed pensions.
Most recent pension updates
HM Revenue & Customs (HMRC) have announced that from the 2024/25 tax year, individuals who have an income of below £12,570 and do not benefit from tax relief, will be paid taxable pension contributions directly from HMRC at the end of the tax year.
As of 6 April 2023, the annual allowance to contribute to pensions was increased to £60,000, with the lifetime allowance effectively abolished.
However, the maximum pensions lump sum has been capped at £268,275. If individuals have protection from previous lifetime allowance reductions they can retain their protected lump sum, and any excess taken will be taxed at the marginal rate of tax rather than 55 per cent.
These updates cover all pension allowances, including personal pensions like SIPPS, and not just workplace pensions.
As an employer, you may feel you have a moral obligation to help your employees secure a comfortable retirement. By assisting them in tracing unclaimed pensions, you not only help them financially but also improve trust and responsibility in your organisation.
Take the initiative today and help your staff claim the pensions that rightfully belong to them.
Our team can offer expert advice on how to manage pensions effectively, including how to trace unclaimed pensions. Contact us today.