Auto-enrolment
From 2012, all employers will have
to comply with additional legislation
contained within the Pensions Act
2008.
Starting from October 2012, there will be staged introduction whereby employers will have to auto-enrol their employees into a workplace pension scheme. The specific date that a particular employer will have to start this process will be determined by the number of employees that are employed within the business.
Clearly, these additional legislative requirements will have potentially significant implications on the majority of employers and will include:
Starting from October 2012, there will be staged introduction whereby employers will have to auto-enrol their employees into a workplace pension scheme. The specific date that a particular employer will have to start this process will be determined by the number of employees that are employed within the business.
Clearly, these additional legislative requirements will have potentially significant implications on the majority of employers and will include:
- Employers must automatically enrol eligible employees in a qualifying pension scheme.
- For DC Schemes, there will be a minimum contribution for employers of 3% of a member's qualifying earnings. For those individuals that do not opt out - transitional provisions apply.
- For Employers with existing Schemes, they will need to satisfy the definition of a qualifying Scheme.
- There will be significant increase in payroll costs for employers who do not currently have any form of workplace pension scheme.
- There will be an increase in payroll costs for most employers with existing pension schemes due to the auto-enrolment requirement, which is likely to increase pension scheme membership significantly.
- There will be additional administration involved with the auto-enrolment process, staff turnover and complexity of checking membership data against legislative requirements.
Transitional provisions - minimum contributions phased over first five years.
In conjunction with the introduction of the
auto-enrolment process, a new qualifying
pension scheme, National Employment
Savings Trust (NEST). The key features
of NEST are:
- It is a trust-based DC occupational scheme, which will be multi-employer based, run on a 'not for profit' basis and regulated by the Pensions Regulator.
- The target market for NEST will be low to middle earners not presently in workplace pension schemes.
- It is not intended to compete with existing workplace pension schemes.
- Maximum contribution will be limited to £4,400 per year (2012-2013 tax year) and the minimum contributions will be as for all other DC schemes and are shown as in the table above.
We have been adding value to our clients by
being proactive in suggesting actions they
should be taking at the present time.
With employers already operating good quality workplace pension schemes, the first step should be a review of the current scheme in detail to determine the specific steps that will need to be taken to ensure that this arrangement satisfies the requirements of a qualifying pension scheme as defined under the new legislation.
These discussions would also cover the impact that there will be in terms of the potentially significant increase to the payroll costs. We are well-versed in the upcoming changes in legislation and ensure they are considered when advising our clients. This allows them to take the necessary action now in making their schemes compliant with the Pensions Act.
With employers already operating good quality workplace pension schemes, the first step should be a review of the current scheme in detail to determine the specific steps that will need to be taken to ensure that this arrangement satisfies the requirements of a qualifying pension scheme as defined under the new legislation.
These discussions would also cover the impact that there will be in terms of the potentially significant increase to the payroll costs. We are well-versed in the upcoming changes in legislation and ensure they are considered when advising our clients. This allows them to take the necessary action now in making their schemes compliant with the Pensions Act.
Table of Fines
