Workplace Pensions & Auto Enrolment
Workplace pension schemes for everyone.
The government has changed its pension legislation and introduced auto enrolment into workplace pensions from October 2012. The key feature is that all employers should provide an adequate pension scheme for their eligible employees.
What is auto enrolment and why was it introduced?
Auto enrolment is the automatic enrolment into a workplace pension plan where employer contributions have become compulsory. This new scheme was introduced because the government considered that approximately 7 million people were not saving anything, or not enough, towards their retirement. People are also living longer and so need to save more towards their retirement years.
Who are part of auto enrolment?
All UK employers will need to have a suitable company workplace pension scheme in place by their allocated date and automatically sign up eligible staff. Those eligible will be:
- Aged 22 up to pension age
- Earn more than the minimum earnings threshold - currently £11,500 (the personal allowance for income tax).
- Not currently joined up to an appropriate pension scheme
If the employer declines to choose an appropriate workplace pension scheme , then the staff will have to be automatically enrolled in NEST instead.
Employers and employees will have to make a minimum level of contributions, eventually amounting to 8% of income a year.
From October 2016 to September 2017, total contributions will be 5% with 2% coming from employers. And from October 2017, the total minimum contribution level will be 8%, with employers contributing at least 3%.
What is an Eligible Auto Enrolment Pension Scheme?
An employer can choose from one of the new schemes that will be offered by the Pension companies or NEST (National Employers Savings Trust).
- Employer Pension Scheme Obligations:
- Register a qualifying scheme with the Pensions Regulator.
- Advise eligible employees that they will be automatically enrolled in the pension scheme if they haven't already joined before automatic enrolment starts.
- Advise employees of the start date and of their right to opt out.
Organise the payment of the employer and employee contributions to the appropriate pension company or NEST.
We can offer you experienced and professional help to guide you through the process of setting up a qualifying scheme of your choice. We understand that workplace pensions may be new and daunting to many business owners. Let us help you before your date arrives.
Free initial no obligation consultation available.
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