In an attempt to improve the retirement situation for the huge number of people in the UK who have made no pension provision, the government has introduced a new law that they say will help alleviate some of the problems. The law came into effect on 1 October 2012 and requires employers to automatically enrol employees into a qualifying workplace pension if they have not already done so themselves. This new law is supposed to act as a solution for those people who either don’t bother, or don’t get around to enrolling themselves into their employer’s schemes.
What does it mean to me as an employer?
Pension automatic enrolment, from an employer’s perspective means that your pension obligations towards your employee will change. When the law came into effect on 1 October 2012, only large employers are affected initially, but even small and medium sized businesses need to be gearing themselves up now for this change.
Once your business is affected, as the employer, you will be responsible for automatically enrolling qualifying employees into your pension scheme, as well as making a contribution towards that pension. What’s more, it’s important not to be fooled into thinking that this new law won’t affect you just because you already have a qualifying pension scheme. Even if you have a qualifying scheme in place, you could still be affected, and now is the time to check out what the new law might mean for you and your business.
Which employees does it affect?
Automatic enrolment affects any employee who:
- Is not already in a qualifying workplace pension scheme
- Is at least 22 years of age
- Is below state pension age
- Earns more than £8,105 per year
- Is required to work or ordinarily works in the UK under their contract
What are the employer’s responsibilities?
When the new law comes into effect, employers will be required to:
This new legislation opens up a whole new chapter of employer pension responsibilities and it’s important that businesses, both large and small go into this new period with their eyes open. We are all only too aware of the scandals that have surrounded pensions planning in the past, making it doubly important that at this new phase in the process, you, as the employer, have the right guidance to make the right decisions for your business.
Where do you go from here?
While the jury is still out on how successful this attempt at plugging the pensions gap might be, there is little doubt that as an employer, this is something you need to be aware of; you need to be prepared for and you need to be thinking about right now. Don’t be tempted to leave this one on your “To Do” list it until it creeps up from behind to bite you!
For more information on dealing with pensions auto-enrolment contact Robin Mead at Payplus on 0800 018 0590 or firstname.lastname@example.org