Pensions – A brief overview on Auto-enrolment

auto-enrolment

Following pension reforms that came into force on 30 June 2012, eventually all UK employers will be required to auto-enrol eligible workers in a pension scheme and make mandatory minimum contributions. It is important that business owners and HR managers are aware of the auto-enrolment scheme.

What is an auto-enrolment scheme?

An automatic enrolment scheme is an occupational or personal pension scheme that meets certain requirements.

Who is an eligible job holder?

An eligible job holder is defined as a worker who meets the following 4 conditions:
• aged between 22 and State Pension Age;
• has earnings that exceed the earnings trigger in a relevant pay reference period. The earnings trigger is set at £9,440.00 for the 2013/14 tax year;
• ordinarily works in Great Britain;
• not already an active member of his employer’s qualifying scheme.

When must eligible jobholders be auto-enroled?

The general rule is that an employer must auto-enrol eligible jobholders in an automatic enrolment scheme with effect from the day the jobholder meets the qualifying requirements. The employer has a period of one month to make these arrangements.

Implementing the new employer duties – staging timetable

The date that an employer is obliged to start the auto enrolment process is dependent on the size of the organisation.

The Pension Regulator has published a staging date timeline which sets down the staging dates that apply to different sizes of employer depending on PAYE date. As a guide the position is as follows:
• More than 250 employees: staging dates between 1 October 2012 and 1 February 2014;
• Between 50 and 249 employees: staging dates between 1 April 2014 and 1 April 2017;
• Fewer than 50 employees: staging dates between 1 June 2015 and 1 April 2017;
• New employers set up between 1 April 2012 and 30 September 2017; staging dates between 1 May 2017 and 1 February 2018.

So depending on the size of your business you or your HR Manager will need to speak to your employees and talk through the changes. Some employees and employers may want to set up a pension scheme before this date so they have more control over their pension rather than using the governments auto enrolment scheme