Auto-Enrolment: Rule Changes for 2012
Auto-enrolment of employees in a workplace pension scheme will soon become an obligatory step for employers to take on behalf of all eligible job-holders.
Changes to the law, as according to the Pension Act of 2008 will be phased in from 2012, and by 2017 all companies must have auto-enrolled all eligible job-holders into a meaningful workplace pension.
Forward planning is essential to fulfilling your obligations on auto-enrolment and changing pension requirements.
Changes to the law on pensions, including auto-enrolment:
As well as a new system on auto-enrolment, changes to the law will also mean that employers will be required to offer the equivalent of 3% of pensionable earnings as a contribution towards any employee pension, regardless of the type of pension that you choose to auto-enrol your employees in.
Any existing pension scheme that you currently have in place must also fully comply with the new laws on auto-enrolment and pension contributions, so you may need to reassess your pension-scheme provision even if you already have a scheme in place.
Company size and auto-enrolment:
The timescale of when employers must comply with rules on auto-enrolment depends on the size of the company:
- If you have 30,000 or more employees you must comply before October 2012.
- If you have 350 or more employees, you must comply before October 2013.
- If you have less that 350 employees you must comply before October 2014.
- If you have less than 50 employees you will have until May 2015
There are 42 individual dates for introduction and we recommend you speak to an independent company pension advisor to find out exactly how and when changes will affect your company.
Eligible job-holders:
Eligible job-holders include those over 22 years old and earning in excess of £8105.00 (the income tax personal allowance for 2012/2013), who has not reached state pension age and who is not already a part of an appropriate pension scheme. Eligible job-holders are auto-enrolled but may decide to opt out.
As an employer you will need to think carefully and consider a number of questions when assessing the best pension scheme for your needs that will also comply with the changes to legislation.
- How will you ensure your pension scheme complies fully with new regulations?
- What are the minimum pension contributions you will need to make?
- How will you arrange the collection and reconciliation of pension contributions?
- How will you co-ordinate communication between all concerned parties to manage opt-in/op-out clauses?
For specialist financial advice to help with implementing new regulations and guidance on finding the right product for your needs speak to an independent company pension advisor for a free initial consultation.
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