The law on workplace pensions has changed and now, under the Pensions Act 2008, every employer in the UK must put certain staff into a penson scheme and contribute towards it. This is what’s know as ‘auto-enrolment’.
Auto-enrolment was designed to encourage a retirement savings culture in the UK. This new legislation requires all employers to automatically enrol some or all members of their workforce (depending on age and salary level) into a pension scheme that meets certain minimum standards. Some workers will also have the right to ask their employer to enrol them into an auto-enrolment pension scheme. Depending on the worker’s age and salary level, employers may be required to make contributions to this pension scheme, adding to the contributions made by their workers.
Who do I need to offer auto-enrolment to?
You need to offer auto-enrolment to workers over the age of 22, under the state pension age and earning more than £9440 per year.
When do I need to enrol staff?
Staging for auto-enrolment began in October 2012 for companies with 120,000 or more employees and will continue to run until February 2018. Advice is to plan ahead – up to 18 months before your staging date – to make sure you are prepared for the transition of ‘auto-enrolment’. To find out your staging date just visit: http://www.thepensionsregulator.gov.uk/en/employers
How much do I need to contribute as an employer?
From October 2012 to September 2017 minimum employer contributions will be 1%. From October 2017 to September 2018 minimum contributions will be 3%, rising to 5% in October 2018.
How much do my employees need to contribute?
From October 2012 to September 2017 minimum employee contributions will be 1%. From October 2017 to September 2018 minimum contributions will be 2%, rising to 3% in October 2018 allowing for tax relief).
Can I opt out of the scheme?
As an employer you cannot opt out of the scheme should your business meet the qualifying critera. As an employee you have the right to exit the scheme should you so wish, but if you do you will lose out on your employers contribution to your pension as well as the governments contribution through tax relief.You can re-join your employer’s workplace pension scheme at a later date if you want to. By law your employer must re-enrol you back into the scheme approximately every three years, as long as you still meet the eligibility criteria.
For any questions or assistance with auto-enrolment call Hello Accountancy now on 0800 8654330 or email: firstname.lastname@example.org