Automatic Enrolment Pensions (UK Government), advice for employers

By | November 22, 2017

Automatic Enrolment Pensions (UK Government), advice for employers

The link at the bottom of the article is to the Pension Advisory Service, it relates to the Government Initiative to making Pensions a compulsory requirement for all employees, above a certain pay level, the fines for ignoring this piece of legislation are substantial.

Automatic Enrolment

(Introduction from the Official Site)

This is a minefield and a number of companies and providers are struggling to sort it out, you need to read the information and see where it affects you and your business.

The schedule of fines has been described as substantial,
for businesses with 5-49 staff, £500 per day,
for businesses with 50-249 staff, £2500 per day.

Please ensure that you fully understand and comply with the Government definition of qualifying staff, it’s not easy.

The Government wants to encourage all workers to save for their retirement, in as easy a way as possible. Therefore, it has introduced a new law designed to help people save more.

From 2012, all employers, starting with the largest employers first, must enrol their eligible workers into a workplace pension, if they are not already in one, if they:

  • Are at least 22 years old;
  • Have not reached state pension age;
  • Earn more than a minimum amount a year (currently £10,000); and
  • Work, or ordinarily work, in the UK (under their contract).

The employer must make all the arrangements and the individual need do nothing to be put into the scheme.

Employers also have to pay a minimum contribution into the pension scheme for their eligible workers.

The Government will also pay into it, in the form of tax relief.

You will not be automatically enrolled into a pension scheme if:

  • you are not eligible; or
  • you are already in a workplace pension scheme that meets the Government’s standards.

If you are not eligible, you might have the right to opt into your employer’s workplace pension scheme, and your employer might pay into it too.

A Guide to Contributions?

The minimum amount you and your employer have to contribute under auto enrolment will gradually increase between 2012 and 2018. It is a percentage of ‘qualifying earnings’ (between £5,772 and £41,865 in 2014/15).
From 2012 to 2017, employees contribute 0.8% plus 0.2% tax relief, employers 1% (overall minimum is 2%)
From 2017 to 2018, employees contribute 2.4% plus 0.6% tax relief, employers 2% (overall minimum is 5%)
From 2018 onwards, employees contribute 4% plus 1% tax relief, employers 3% (overall minimum is 8%)

Many existing occupational schemes and company sponsored group personal pensions already qualify, but will be extended to take in a greater proportion of the workforce. Employers without a scheme can set up one of their own or enrol their workforce into the National Employment Savings Trust (NEST).

Please click on this link for the full Government Details

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