foodSpring 2011

In this issue

� Food inflation – opportunity or threat to your business?� Jon Thorner’s – Stepping up a gear� The new Supermarket Ombudsman� RD Analytical – Food and water analytical testing for West Country businesses� Taylerson’s Malmesbury Syrups� The Training Partnership� Could global demand increase your global presence?� Where’s the cash coming from?� Make food and drink even more appetizing for potential investors� Auto enrolment for employee’s pension schemes – food businesses beware

Insight for food businesses

Spring 2011

2 Food Inflation – opportunityor threat to your business?The papers are full of stories about foodinflation and the rise of commodityprices. Wheat prices are at record levels,cocoa is at a 14 year high whilst coffee isat a 40 year high.

Cheese and butter have both risen above the price of the fresh milk market – almost unheard of in recentyears – and all is backed up by ever rising oil pricesdriving up energy costs. Does this mean things aregoing to get a lot harder for local food producers – or can you seize the initiative to grasp possibleopportunities which arise?

There is not a lot we can do about food inflationexcept for a certain amount of spreading our risk byspreading the timing of our purchases. There seemsto be a general consensus that for at least themedium term commodity prices are going tocontinue to be strong. Currently political turmoil inthe Middle East is generating uncertainty and for thelonger term the fact that the emerging economies aregrowing much faster than the traditional westerneconomies is significantly increasing demand inadvance of any increase in supply for food goods.According to the doom-mongers this is setting a levelof demand which the world will struggle to meet.

What does this all mean on the ground in thiscountry? Most households are really beginning tonotice a significant increase in their weekly shoppingbill. The papers have been full of stories about peopleswitching either to the cheap supermarkets or to theeconomy lines in mainstream supermarkets. One hasto be a little sceptical about this. There still seems tobe a significant demand for both quality productsand for local products. Price is influencing the public’sthinking but there seem to be other factors that arebeing taken into account. Quality, taste and localprovenance are still very much on the menu.

There has to be a strong suspicion that, as with allprice rises, some of the increases we have beenseeing are not directly linked to costs of ingredientsor costs of production. Retailers may on occasioncash in on consumer acceptance that prices aregoing up. This is where smaller food producers –especially of quality, local products – may be able tofind a window of opportunity.

The first step has to be to calculate how much yourcosts have actually gone up. What has been the actualincrease in your raw material cost per unit produced?How much is the increased cost of energy, packaging,transport etc for each unit produced? This may befiddly to work out but from a business point of view itis very worthwhile to know exactly where you are.

A next step is to go to your local supermarket to lookat the costs of ‘equivalent’ products. You may findthat in many cases there has been a widening of thegap rather than a closing and that your products arecheaper by comparison.

Perhaps now is the time for producers of foods aimedat their local market to join forces with farm shopsand other local food outlets to really drive home themessage – quality local foods can offer excellentvalue for money.

Old Mill is very happy to work with clients to helpthem to understand the real nature of their costs andtheir profit margins to guage the effect that foodinflation is having.

Jolyon Stonehouse,Corporate Partner

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Perhaps now is the time forproducers of foods aimed attheir local market to joinforces with farm shops andother local food outlets...

Client profile

Jon Thorner’s – stepping up a gear

Moving yourbusiness forward inthese times ofrecession issomething many ofus balk at. HoweverOld Mill client JonThorner’s of Pylle

near Shepton Mallet has certainly buckedthe trend with some innovativedevelopments over the past year.

Jon runs one of the regions larger farm shop andbutchery businesses. At Old Mill we look after manyfarm shops and therefore can monitor how the sector isdoing. About four years ago, when farm shops were allthe rage, with new shops opening every month I askedJon how he saw the future prospects for growth. Hesurprised me by being the first person who predictedgrowth might plateau. This insight has obviouslyhelped him put into place the entrepreneurial planswhich have enabled him to move his business on,whilst still remaining true to his ethos of sourcing localproduce and suppliers.

There are three main areas which have seen advancesin the past year. One has been on what he calls his‘kitchen’. They manufacture a range of pies, cakes,ready meals and salads which have really taken off overthe past 18 months. The ‘kitchen’ now employs 20members of staff – the pies in particular have provedvery successful. He has made sure his products are soldthrough a number of varied routes to market; his ownfarm shops, his van sales to local retailers (he covers themost of the south west going as far as Reading threetimes a week), relationships with retailers

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Jon Thorner with the manager of his new cafe

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such as Mole Valley Farmers, Cadbury Group gardencentres and through Wholesalers like Stocked who alsofeed his products into national wholesaler Palmer andHarvey’s. You may even come across one of his qualitypies in a retailer in Scotland!

Butchery is often seen as a difficult area to achievegrowth against the power of the supermarkets. Over theyears Jon has established the idea of running the meatcounter in other people’s farm shops – fellow Old Millclients Farrington’s and White Row being excellentexamples. Last autumn he has extended this principleby linking up with the Radstock Co-operative who runa number of Co-op stores in Somerset. It is early daysfor this development and it will be interesting to seehow it evolves.

Jon had initial doubts about his third initiative. At theend of October he opened the ‘Coffee Den’ in a newstand-alone building adjoining the car park. However,he is now already convinced they are on to a winner.Despite being the wrong season and subject to somelousy weather, takings have been most encouraging.

It is focused on coffee with hot food from 12 – 3pm butthe most striking thing is the impressive standard of theaccommodation. Bucket seats and quality furnishing givethe café a touch of class and for those wanting to hold aquiet meeting, or to get on with some work on theirlaptop, there is an upstairs area with free wi-fi access.

As well as moving the business forward, Jon has beengaining publicity through winning many accolades andawards. In the past year he won nine Taste of the Westawards – including a Gold for his own free range drycured back bacon.

In November he won the prestigious 2010 Q GuildButchers Diamond Cup Award for his Beef and StiltonPie. The award was presented by Heston Blumenthal atButchers Hall in London in the Smithfield NationalProduct Evaluation. To round off the year he was evennamed Businessperson of the Year by the SheptonMallet Journal!Jon Thorner’s new Coffee Den

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David Balch

The new SupermarketOmbudsmanThe Government is in the process ofenacting a bill to introduce a new GroceryMarket Ombudsman – but what will it doand how will it operate?

The bill would establish an independent Ombudsmanto oversee the operation of the Groceries Supply Codeof Practice (GSCOP). The GSCOP established by theCompetition Commission (CC), was revised in 2008following a review by the CC, which furtherrecommended the establishment of an Ombudsman topolice the GSCOP.

If brought into force, the bill will enable the Office ofFair Trading (OFT) to establish an Ombudsman toinvestigate complaints or disputes referred by the OFT,retailers or suppliers in relation to non-compliance withthe GSCOP.

The Ombudsman’s determination would be binding onall parties and he/she would have the power to imposemonetary penalties and/or costs. The overridingobjective of the Ombudsman will be to undertakeinvestigations and arbitrate disputes arising fromGSCOP to promote the interests of consumers.

The new Code of Practice will be included in allretailers’ contracts with their suppliers and provide amuch clearer framework for these agreements. The

aim of the GSCOP is that suppliers do not have costs imposed on them unexpectedly or

unfairly by retailers.

The revised GSCOP amends the existing code ofpractice so that:� the provisions of the GSCOP are included in every

contract between grocery retailers and their suppliers;� all retailers with groceries turnover in excess of £1

billion per year are included within its scope;� an overarching fair dealing provision is included;� retailers are prohibited from making retrospective

adjustments to terms and conditions of supply;� retailers are prohibited from entering into

arrangements with suppliers that result in suppliersbeing held liable for losses due to shrinkage;

� retailers are required to enter into binding arbitrationto resolve any dispute with a supplier; and

� retailers are required to keep written records of allagreements with suppliers on terms and conditions of supply.

Although still in consultation, the cost of theOmbudsman would in part be funded by the OFT andpartly funded by the top 10 Retailers. It is estimatedthe costs would be around £5 million, although this asmall fraction of an industry worth £70 billion. There islikely to be a formula whereby the cost is apportionedbased on the size and number of complaints receivedby the retailers.

The bill will provide a framework for food manufacturersand suppliers to communicate instances of non-compliance with the GSCOP anonymously, which intheory at least will provide for fairer terms for suppliers.This will hopefully remove the fear of some suppliers,whereby should they make a complaint to the OFT atpresent, they run the risk of losing lucrative contractswith retailers.

Furthermore, with less pressure on price, and improvedmargin to the supplier, it is thought that theestablishment of an Ombudsman would lead to moreof an emphasis on quality of produce supplied, ratherthan on low cost production.

However, the proposed bill is still in the consultationphase and is unlikely to be brought to parliament untillater this year, with implementation unlikely to be until2012. Although there are obvious merits in itsstablishment, its speed of creation is not one of them.

7 Client profile

RD Analytical – food and wateranalytical testing for WestCountry businessesIf you are looking for scientific analysisfrom a West Country Laboratory withpersonal service combined with extensiveexperience then RD Analytical (RDA) maybe the solution for you.

Managing Director and Owner, Richard Johnstone,formed RDA following a management buy out of theWells division of Leatherhead Food International in2008. He has gone on to put together a dedicated andknowledgeable team with over 100 years experience ofanalysis in the food industry between them, whocontinue to operate from the easily accessible site inJocelyn Drive in Wells, Somerset.

In-house specialisms that the team offer include UKASISO17025 accredited microbiological analysis of food,water and swabs, rapid services for Listeria andSalmonella detection and analysis of samples incompliance with the M&S and Tesco Laboratoryapproval schemes. The in-house work is alsosupplemented by strong relationships with otherspecialist laboratories offering services in areas such asallergenic and GMO analyses, Pesticide analyses andNutritional, Vitamins and Mineral composition analysis.

RDA recognises the essential nature of a reliable,efficient and interactive service for food and beveragebusinesses. Checked and authorised results are

available promptly via their secure web portal;supporting hard copy reports (at no additional charges)are also always available for those clients preferring notto use electronic methods. Always being able to speakto a member of the team and assistance withinterpreting your results is an integral part of theservice and can be a very useful benefit for new orsmall businesses where they may not have significantTechnical support in-house. RDA is very aware of thefinancial pressures that businesses are working underand so have designed a number of economicallypriced ‘boxed packages’ so you know exactly whatyou are getting for a pre-agreed amount.

Richard moved his accounts across to Chris Bowles atOld Mill last year. His business was growing and he feltthat he wasn’t getting enough proactive advice fromhis previous accountant. He interviewed a number ofpractices before choosing Old Mill where he thoughtthat a forward looking approach and involvement inboth the local business community and the food sectorwould provide him with the kind of partner he wantedto help move his business forward.

Tel: 01749 670124 E-mail: customerservices@rdanalytical.comwww.rdanalytical.com

Richard Johnstone with lab manager Shelley Burch. Photograph © Business Link

Left to right: Anne Johnstone, Ann Gooding, Richard Johnstoneand Ann Fry

8Client profile

Taylerson’s Malmesbury SyrupsDeciding to set up your own business issomething that many people are temptedto do – but it is probably even more of achallenge when you have been workingfor large food businesses for many yearsbeforehand.

John Taylerson was well known for his work in the dairyindustry before he took the decision to start fromscratch his own food and drink business; Taylerson’sMalmesbury Syrups.

As the Chartered Institute of Marketing’s foodambassador for the South West – there were a lot ofpeople watching with interest to see how he fared.However, John was keen to ‘practice what he preached’and produced a premium, differentiated andnew/emerging product range.

John had a very clear target of wanting to produce aproduct that the likes of Waitrose would put on theirshelves and whilst he achieved that and more within 12 months of starting it would be fair to say that it hasprobably been harder than he expected. He has neededevery aspect of his marketing skills to move thebusiness forward. To start with, his products areexcellent, but ‘niche’ would be a good description. Theyare not products that you usually have on your weeklyshopping list; syrups that you pour into a cup of coffeeto give it a taste of caramel, cinnamon, ginger,Amaretto or a host of others. They are sold in distinctivelong neck bottles and pour into the coffee with asatisfying slurp. There was a huge marketing job to getthe concept across.

John was keen to reduce the cost-of-sales and saw themass food markets being a priority. He found foodwholesalers didn’t add a great deal of value – and werenot good at communicating or giving marketinformation. Online shopping was a huge challenge butthanks to an excellent website, worked up with the co-operation of his brother, last Christmas he madesubstantial progress with this which provided a newmarket, cash up-front and direct feedback fromconsumers. Marketing to the retail chains has now beenhis biggest breakthrough to date and this year has seensubstantial trade with Julian Graves and Holland andBarrett amongst others. His next challenge is to get oneof the coffee shop chains to offer his syrups as an extrashot to their coffees. The consumers love the productbut the coffee shop chains are buying well establishedforeign products; however, the independent coffeeshops have proved very successful and once again,responding to their requirements has provedsuccessful. Progress has sometimes been hard and hehas been grateful at times to be dragged back intosome consultancy work for larger businesses.

Most food and drink businesses require relativelylarge amounts of capital both in equipment and forwork-in-progress. He has been delighted, that despitethe recession he has always received enlightenedsupport from his banker, Barry Vincent at LloydsTSB.Without that there were times when he would haveclosed his doors. More recently he has been pleasedwith the help that his accountant, Richard Haines ofOld Mill has been able to give him as he looks to thenext phase of his development.

Although the temptations of big business may causehim to waver from time to time, you feel that if Johncontinues with his imaginative product innovation andto utilise his marketing skills, he will soon have abusiness to be reckoned with.

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10 Guest spot

The Training PartnershipWe all recognise that this coming year isgoing to be tough for all businesses – themedia keep reminding us of this fact onvirtually a daily basis.

What a lot of companies do not recognise, however, is that this is the ideal time to completely review andrenew both their marketing approach and practicalmarketing activity.

The Training Partnership has recently completed thefirst tranche of a programme of Workshops aimedspecifically at specialist Food Producers and Suppliersin Cornwall. Working closely with the Cornwall Agri-Food Council Development Team (CornwallDevelopment Company), the approach has been tooffer easy to understand and assimilate ‘hands on’training tailored to the delegates’ real life businesssituations and challenges.

The first four Workshops covered the following topics.1. Understanding and Implementing Your Marketing2. Promoting Your Business3. Developing and Applying Direct Marketing4. Making Effective Use of the Internet

The interactive Workshops were complemented byinformative Workbooks, which combined vitalinformation, useful guidance and practical activitiesallowing the owners and directors of the companiesattending to ensure that the ideas and opportunities

discussed at the sessions could be easily absorbed andrapidly put into practice within their businesses.

Through links with Duchy College, successfulcompletion of the entire workshop programme (withadditional tasks) also offered the optional bonus ofbeing linked to the attainment of an Accredited level 4qualification in Furthering Professional Practice.

The Training Partnership are already updating thesessions, prior to repeating the programme in 2011,along with hopefully some extra Workshops identifiedby the delegates, covering such important aspects asPractical and Professional Selling; Using Social MediaMarketing to Your Benefit; Copywriting; Creating,Developing and Protecting Your Brand.

The expertise of the two Principal Partners indeveloping and implementing effective StrategicMarketing Programmes for clients, combined with theirpractical experience of working within the foodindustry ensured that the Workshops were interesting,lively, practical and extremely relevant.

Created with a training and mentoring philosophybased on an old Chinese proverb: “Tell me and Iforget; show me and I may remember; involve meand I will understand.” The workshops weredeveloped in this case to meet the specific needs of theCornish food sector but remain in terms of approachand format, wholly adaptable to any sector or situation.

If you would like to know more about the trainingpartnership please contact John Parker by emailjohnparker9fl@btinternet.com or ring him on 01963 824412.

...the Workshops wereinteresting, lively, practicaland extremely relevant.

11 Could global demand increaseyour global presence?Recent research and projections indicatea 20-30 year trend of increased demandfor food as the global population risesever higher.

This will no doubt place more emphasis on foodproducers not only producing more and at lower cost,but will also place more pressure on those producerslooking to previously unchartered markets wheredemand is greater.

As a food producer, it could well be time to be thinkingstrategically about what this might mean for you andyour business. With increases in population, there willbe an increase in wealth distribution globally, and withthis an appetite and financial ability to purchaseproduct from further afield. For example, there hasbeen increased global demand for high end whiskyfrom the UK in recent years. With this in mind, it mightbe an opportune time to think about your marketingand distribution plans for the short to medium termand whether this might result in a greater globalfootprint for your products.

And for food producers in the South West, longregarded as a centre for well produced, qualityproducts, this plays well to our strengths. Therefore if you have a premium product, the opportunity tothink globally about your market and distribution haspotentially never been any better. In order to do thisyou will need to think critically about your traditional

routes to market, starting with some basic marketresearch of where your product might best fit. Thereare agencies out there who will be able to conductmarket research on your behalf and similarly agencieswho can help act as sales agents and distributors onceyou have found the market in which you wish to sellyour product.

However, a global outlook does not necessarily meanlooking overseas for additional revenue. For manybusinesses there are still opportunities to look furtherafield in the UK and finding distribution networks tomarket your product in other geographic areas.

If you do see potential to grow you business to servenew markets either at home or overseas there are manyfactors to consider. If you need to increase productionwill you need to build your capacity? Will you need toraise finance to fund capital spend? Will this result inincreased labour requirements?

At Old Mill we advise and assist our clients in thinkingthrough their long term strategic plans and helpingthem put them into action at the same time ensuringthat a tax efficient structure is put in place.

Please feel free to contact us. David Balch can becontacted on 01392 280346 or email himdavid.balch@oldmillgroup.co.uk.

David Balch

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Even though there is still aperception that banks arereluctant to lend, themajority are extremelyenthusiastic to lend tosuccessful and growingbusinesses.

13 Where’s the cash coming from?We are delighted to welcome Pat Tomlinson to Old Mill asan Associate Director in the rural team.

Pat comes with a strength and depth of experience in theAgriculture, food and finance sectors, mainly through hisbanking career, which culminated in being Head ofAgriculture at HSBC Bank. Pat's experience and abilitiesacross all areas of business advice will be a valuable assetto the team and the service we provide to our growingclient base.

“Cash is king” as the saying goes and forseveral reasons, most food relatedbusinesses are going to need more cashover the next year than they have in thepast year.

As ever it is always best to ask for more cash before it isneeded rather than after, so what might cause thatneed and how might it be funded in today’schallenging credit climate?

Well firstly with commodity prices, particularly wheat,sugar and oil, having spiralled over recent months,most food processing businesses will experiencesubstantial increases in raw material and processingcosts – and hence working capital requirements willalso increase. This might be funded by improved creditterms from suppliers but in the current economicclimate, most businesses along the food supply chainwill be doing all they can to reign in cash rather thanextend credit to their customers (indeed, it is morelikely that they will be tightening their credit terms,which in itself will lead to more cash being needed).More likely is that the extra cash will have to be fundedby a new or increased overdraft facility. If the businessis used to working with a degree of “headroom” in itsexisting overdraft facility then that may disappear orworse, the limit might be exceeded.

Such increased borrowing requirements are entirelylogical and explainable and, assuming that the businesscan pass on the raw material inflation to its customers(not easy of course) and remain profitable, a bankshould in principle be supportive. Nothing cansubstitute for being proactive in projecting the

increased cash required and discussing that with thebank, well before it is needed – that in itself is far morelikely to result in a favourable response.

Assuming the raw material inflation is subsequentlyreflected in increased product prices, the debtor bookwill grow and if the business relies on invoice financethen that should release cash – as long as the facilitylimit is sufficient to enable all debtors to be funded.Again, some simple projections of turnover andaverage debtor payment days will enable a sufficientlyaccurate assessment of borrowing requirements; suchthat a proactive discussion with the invoice financeprovider can be had before the extra cash is needed.

On a more positive note, there will undoubtedly beopportunities for the successful food related businessesto grow over the next year and while sales growth isusually good, it is dangerous unless the consequentborrowing requirements to fund increased stock anddebtors have been assessed and matched withappropriate borrowing facilities. It is a travesty for thesales function to find new contracts, only to be told bythe finance function that the business cannot deliverthe necessary products, because the business hasinsufficient cash to fund the extra production.

Finally, cash still commands a premium in the marketand so, if a business has readily available cash, it willusually negotiate advantageous terms for its supplies –especially when many suppliers may well be hungry forimmediate cash as opposed to a credit sale.

Even though there is still a perception that banks arereluctant to lend, the majority are extremelyenthusiastic to lend to successful and growingbusinesses. If there is an element of “back to basics”from the lenders in their assessment, then that shouldeasily be mirrored by a “back to basics” approach fromthe borrower – assessment of borrowing requirementsbefore they are needed, as part of a robust annualbusiness plan is a fundamental pre-requisite toproactive and constructive negotiations with the bank.

The Old Mill team is very experienced in helping existingand new clients throughout the financing process andnow more than ever, to make sure that cash is given thenecessary respect that the king deserves!

Pat Tomlinson,Associate Director

14 Make food and drink evenmore appetizing for potentialinvestors!Any food and drink business looking foroutside investment to take them to thenext level should be considering whetherthey could be making use of the EnterpriseInvestment Scheme (EIS) to gain access tosome extremely valuable tax breaks fortheir investors.

The EIS is designed to help smaller trading companiesto raise finance by offering a range of tax reliefs toequity investors who purchase new shares in thosecompanies, providing those shares are held for thequalifying period which is normally three years.

Good examples could include manufacturers who arelooking to invest in new plant and equipment toincrease production but who are finding it difficult toobtain debt funding from banks. Similarly, familybusinesses looking to fund the retirement of oldergenerations and bring in fresh management could alsobe able to benefit.

The available tax reliefs for investors are:� Income Tax

� 20% Income Tax rebate on the investment made. A£10,000 investment would therefore qualify for a taxrebate of £2,000.

� Any loss on the value of the shares when disposedof is an allowable deduction against Income Tax,less the initial 20% tax rebate received.

� Capital Gains Tax� An EIS investment can be used to defer a CGT

liability� If the value of the EIS shares rises, they can be sold

free of Capital Gains after the qualifying period� Inheritance Tax

� After two years the shares qualify for 100% BusinessProperty Relief against Inheritance Tax meaningthat they are not chargeable for IHT if still held onthe investor’s death

HMRC sets strict qualifying criteria for EIS investments,the key points of which are as follows:The trade

� Most trades qualify, but some trades are excluded,including:� Farming or Market Gardening� Property development� Commercial forestry� Providing services primarily to those whose trade

consists of excluded activities, thus excludingbusiness such as agricultural contractors

� The company cannot raise more than £2m from EIS investments in any 12 month period

� The company must have less than 50 full time (or equivalent) staff

The investor

� All shares must be fully paid up with no preferentialrights to dividends

� The investor must make a minimum subscription of£500 and there is a cap on subscriptions of £500,000in any tax year. Importantly, EIS subscriptions can alsobe carried back to set against income in the previoustax year and therefore provide a route to reclaim taxafter the end of the tax year. This is in contrast to apension contribution which must be made before theend of the tax year on 5 April to be effective inreducing that year’s tax liability.

� No one investor, or group of connected investors, cancontrol more than 30% of the company’s sharecapital. Connected parties include spouses, parents,grandparents, children and grandchildren but,importantly, not brothers and sisters.

Remember that most trading businesses could beeligible to take advantage of the tax breaks that EISprovides, subject to the qualifying criteria. Otherexamples within the food and drink sector couldinclude retail shops, many tourism ventures andrenewable energy investments such as wind farms and photo-voltaic projects.

EIS is a complex area but there are substantial benefitsof being able to use the scheme. If you are consideringany such projects please feel free to contact us to see ifyou could benefit from the reliefs available.

Andrew Vickery,Associate Director

15 Auto-enrolment foremployee’s pension schemes –food businesses bewareThe government’s new initiative to getemployers to help ensure that theiremployees build up a significant pensionpot is likely to impose a disproportionateburden on food businesses where aheavy reliance on labour is often theorder of the day.

The new scheme not only gives extra responsibilities toemployers – you will have to automatically enrol peoplebut by the time the scheme is fully up and running youwill have to make an employer contribution equivalentto 3% an employees wages into their pot.

With a dedicated pension consultancy team Old Mill areideally placed to help you understand the complexities ofthe new scheme and help advise on its implementation.

What Is auto-enrolment?

Auto-enrolment will mean all workers between the ageof 22 and state pensionable age who earn more thanthe basic tax level (currently around £7,000 per annum)must automatically be enrolled into their employer'squalifying pension scheme, without any active decisionon their part, within three months of starting work. Atpresent, many workers fail to take up valuable pensionbenefits because they do not make an application tojoin their employer's scheme. Auto-enrolment is meantto overcome this.

After auto-enrolment, an employer has one month toprovide the employee with details and the employee hasone month to decide if they want to opt out. However,an employer then has to automatically re-enrol themafter three years when they could again opt out.

Employers can choose the qualifying scheme theyuse, which could include NEST (the NationalEmployment Savings Trust). Each qualifying schememust meet minimum standards in respect of the

benefits it provides or the amount of contributionspaid to it. The scheme must also provide auto-enrolment for all eligible workers, and for all newworkers when they become eligible.

The basics

Employers must:� enrol workers into a qualifying workplace pension

arrangement; � choose the qualifying scheme(s) they adopt to

discharge the newly arising duty; and or� make a minimum 3% contribution towards NEST � offer membership and make a 3% contribution to a

qualifying defined benefit scheme

Employers will also have an ongoing duty to maintainqualifying pension provision for workers who;� are already members of qualifying schemes; or � become members of such schemes.

Gradual introduction of auto-enrolment

Although new duties come in from 1 October 2012there is a gradual introduction. Individual employers'own duties will be introduced gradually over thefollowing four years and will be based on the size of theemployer, typically by PAYE size. The minimumcontribution levels will be phased in between October2012 and October 2017.

If you would like to know more about when yourbusiness become liable for these new responsibilitiesand how they are going to affect you please contactSteve Woodham of our Pensions Consultancy team on 01749 335027.

Steve Woodham,PensionsConsultant

www.oldmillgroup.co.uk

The content of this newsletter is for general information only. It should not be relied onand action which could affect your business should not be taken without appropriateprofessional advice. Please contact your usual Old Mill contact or local Old Mill office.

Contact Old MillRichard HainesUnit 4 Challeymead Business Park, Melksham,Wiltshire SN10 8BUTel: 01225 701210 Fax: 01225 709817E-mail: melksham@oldmillgroup.co.uk

Andrew Vickery or David BalchBerkeley House, Dix’s Field, Exeter, Devon EX1 1PZTel: 01392 214635 Fax: 01392 214690Email: exeter@oldmillgroup.co.uk

Duncan Perks or David MaslenThe Old Rectory, South Walks Road,Dorchester, Dorset DT1 1DTTel: 01305 268168 Fax: 01305 268688Email: dorchester@oldmillgroup.co.uk

Alan StoneThe Old Mill, Park Road, Shepton Mallet, Somerset BA4 5BSTel: 01749 343366 Fax: 01749 344986Email: sheptonmallet@oldmillgroup.co.uk

Pat TomlinsonNumber One Goldcroft, Yeovil, Somerset BA21 4DXTel: 01935 426181 Fax: 01935 431852Email: yeovil@oldmillgroup.co.uk