Auto enrolment is a legal requirement that means companies have to automatically enrol eligible workers into a qualifying pension scheme – it’s designed to push millions of workers into saving money for their retirement for the first time.
Click on the link to read the news story in the Yorkshire Times or read below. http://yorkshiretimes.co.uk/article/AutoEnrolment-Pensions-What-Business-Owners-Need-To-Know
Companies also have to make a contribution to the employee’s pension pot. Workers can opt out but only after they have already been automatically enrolled in a pension scheme.
Who is affected?
The changes affect all workers but there are differences between “eligible workers” and “entitled workers”.
An eligible worker is aged over 22, but below the state pension age, working in the UK and earning more than £8,105 a year (this amount will be reviewed each year). They can’t already be in a qualifying pension scheme.
An entitled worker is one earning less than £5,564 (tax year 2012/13). They must be given the opportunity to join a workplace pension scheme but this does not have to be a qualifying pension scheme and they aren’t actually entitled to receive contributions from their employer although a company can make contributions if it decides to.
When will the changes take place?
Auto enrolment is happening on a staged basis with the biggest companies (those with more than 120,000 staff) being affected now! The next companies to be affected are those employing between 50,000 and 119,999, who will go on 1 November 2012
If you want to find out what your date is then have a look at The Pension Regulator website: http://www.thepensionsregulator.gov.uk/
This website has a wealth of information on auto-enrolment and should be your first port of call. The latest staging date is in 2017, so whilst this may not affect your business for a while, it is worth getting organised now.
How much will I need to contribute as an employer?
Minimum contribution levels to be made by the company are also on a staged basis, so again, you need to ascertain how this will affect you as this will have a financial impact on your business.
Employers who don’t comply with the rules face a range of potential sanctions beginning with a fixed penalty of £400.
What do I need to do now?
If you already have a pension scheme in place then you will need to review it to see if it complies with the requirements set out under auto-enrolment.
Once you have gathered together all the basic information that you need such as when your company is affected, how many eligible/entitled workers you have etc. it may be a good idea to seek professional advice.
There are plenty of financial advisers and pension experts who will be able to help and assist you.
Helen Straw is the founder and managing director of The Personnel Partnership based in Holmfirth, which provides bespoke HR services on both an operational and strategic level for businesses nationwide.