The government’s new pension plans will impact employers in the hair industry because of the number of young people working in the sector and those earning a minimum wage, warns the NHF.
The government has announced plans to reduce the minimum age for enrolling staff from 22 to 18 in ‘the mid 2020s’ provided their earnings are over £10,000. This will bring around 900,000 people into the pension system, increasing costs for employers who will need to make contributions for this age group for the first time.
Since auto-enrolment was introduced in 2012, the contributions for both employers and employees have been set at 1%. However, from April 2018, pension contributions will increase to 2% for employers and 3% for employees, and they will increase again to 3% for employers and 5% for employees in April 2019. There are also moves to calculate contributions on all earnings up to £45,000, rather than the current ‘banded earnings’ system which calculates contributions on earnings between £5,876 and £45,000.
NHF chief executive, Hilary Hall, said: “As well as the scheduled increases which will triple pension costs for employers over the next couple of years, future plans to include younger workers and to move away from contributions based on ‘banded earnings’ will further increase employer costs. We may see more workers choosing to opt-out of pension contributions, which would defeat the aim of getting people into the habit of saving for retirement.”