Company Pensions 2012 - Information regarding future pension changes
The rules on company pensions are set to change in 2012. From 2012 onwards every employer will be legally obliged to auto-enrol eligible job-holders in a company pension scheme, an alternative suitable pension scheme, or in the new low-cost government NEST (National Employment Savings Trust) scheme.
The changes to company pensions will be phased in more slowly for small and medium sized companies, to allow time to plan ahead for any budget changes.
The changes in pension law will come into force from 2012 for companies with 30,000 employees or more, from 2013 for those with 350 employees or more, and between 2014-2017 for those with less than 350 employees.
For participating employees, employers must contribute the equivalent to at least 3% of the employees annual salary. Overall contributions towards the retirement fund must be equivalent to at least 8% of annual salary, which includes a government tax-relief of 1%, with employees contributions topping up the fund to the final amount.
Eligibility will apply types of employee including fixed term and part-time contract workers, and anyone working in Great Britain whether under written or oral contract. Employees may choose to opt-out of any pension scheme they are auto-enrolled in. If you own a business of any size you may want to consider:
- The type of pension scheme that would be most suitable for your company.
- Will your chosen pension scheme meet government requirements?
- How you will budget for the change?
- How will you communicate and implement changes?
The new law will apply to all job-holders earning more than £8105.00 and over 22 years old, who has not reached state pension age and is not already part of a suitable pension scheme. However, those earning over £5564.00 will be eligible to receive employer contributions should they decide to opt-in. For further advice on how the changes in company pension law may affect you or your business from 2012 we recommend you speak independent company pension advisor for impartial advice and a free initial consultation.
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