Work place pension reform – Automatic Enrolment fast approaching…

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The date by which businesses that employ less than 90 employees will be required to automatically enrol eligible employees into a Workplace Pension is rapidly approaching. The Pensions Regulator will ensure employers comply and there are staging dates for enrolment depending on the size of the company.

In summary, every employer (depending on the staging date) will have to enrol into a workplace pension those employees who:

  • Are not already in a workplace pension scheme;
  • Are at least 22 years old;
  • Have not yet reached State Pension age;
  • Earn more than the minimum earnings threshold (currently £10,000 per annum);
  • Work or ordinarily work in the UK.

Employees can opt out but if they do after the start of the scheme they may find any contributions they have accumulated will remain with the scheme. They can re-join at a later date if they wish.

The employer also has a duty to automatically enrol employees back into the scheme approximately every three years.  This gives those who have left the scheme the opportunity to reconsider their pensions saving.

The staging dates are:

  • Employers with 50 – 249 employees = Apr 2014 – Apr 2015
  • Employers with 49 employees or less = Aug 2015 – Apr 2017
  • New Employers after April 2012 = May 2017 – Feb 2018

The contributions are:

Timing  Minimum Contribution for Employer 
Staging date to Sept 2017  1%
Oct 2017 to Sept 2018  2%
Oct 2018 onwards  3%

 

The above is a very brief overview of the new arrangements but as you can see as well as obvious cost implications, there are minimum contribution levels for both employers and employees. There is also an additional administrative and communication burden on employers to ensure compliance with the regulations. Early planning for the introduction of your scheme is therefore highly advisable to ensure the right scheme, the right contribution structure and the right systems are in place and you are fully aware of your ongoing costs and ongoing duties.

To help you get off the ground with the new scheme and stay within the letter of the law, we have teamed up with Ascot Lloyd Financial Services Ltd to deliver a FREE Auto Enrolment Workshop.