Pension Auto Enrolment

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Pension Auto Enrolment

Changes to the law on workplace pensions now means that any UK business that employs 1 or more people have to put them into a pension scheme.  You will need to:

  • Provide employees with access to a workplace pension scheme
  • Automatically enrol some employees
  • Pay contributions for your employees

All companies will be given a “staging date”, this is the date by which you need to have your scheme in place and be ready to enrol your employees.  As a guide the dates are:

  • 250 or more employees October 2012 – February 2014
  • 50-249 employees April 2014 – April 2015
  • 50 or less employees June 2015 – April 2017

Who to enrol

You will need to automatically enrol and make contributions for employees who:

  • Are not already an active member of qualifying scheme
  • Work in the UK
  • Earn more than £10,000 per year
  • 22 years of age or older

Employers have a legal responsibility to let their employees know how the changes affect them, even if they are not eligible for automatic enrolment.

Moth to month can opt out of the scheme within one moth of their enrolment.  If they choose to opt out the employer will need to refund any contributions they’ve made.

The legal minimum contribution for all employees is currently 2% of their qualifying earnings meaning that the employer must pay at least 1%.  Note that qualifying earnings include salary, overtime, bonuses/commission as well as statutory sick pay, maternity, paternity and adoption pay.  The minimum contributions will gradually increase over time, from October 2018 the minimum contribution rises to 8% of which the employer must pay 3%.

Preparation to enrol employees may mean making changes to your systems and processes, it is a good idea to start thinking through your key decisions and implementation plan as early as possible, a general guide is that it can take a large organisation up to 12 months to be ready, and around 6 months for smaller companies.

websters can help you set up a scheme, administer it and deal with payroll requirements.  For further information please contact your Account Manager.