Pension Auto Enrolment
Workplace pension schemes for everyone.
The government is changing pension legislation and introducing auto enrolment into company 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 is it being introduced?Auto enrolment is the automatic enrolment into work place pension plan where employer contributions will be compulsory.
This new scheme is being introduced because the government considers that approximately 7 million people are 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 will be part of auto enrolment?All UK employers will need to have a suitable company 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 £7475 (the personal allowance for income tax).
- Not currently joined up to an appropriate pension scheme
If such a pension scheme is not provided, then the staff will have to be automatically enrolled in
NEST instead.
Employers and employees will also have to make a minimum level of contributions, eventually amounting to 8% of income a year. Until October 2016, the minimum overall level of contributions will be just 2%, with 1% coming from employers.
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.
- Pay the employer and employee contributions.
What Next?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.
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