Since 1 October 2012 employers are required to provide many employees with a minimum level of pension provision to make it easier for people to save for their retirement.
Who Is Eligible For Pension Auto-Enrolment?
UK employees who are eligible for pension auto-enrolment are those who are:
- Earning more than £8,105 a year.
- At least 22-years-old, but below state pension age.
- Not already signed up to a work pension that meets the Government’s requirements.
When Does Pension Auto-Enrolment Start?
The date on which an employer must auto-enrol their staff into a the pension scheme is called the ‘staging date’. This will vary from business to business, depending on the size of its PAYE scheme on 01 April 2012.
Staging dates have been allocated at various points over four years, with the largest companies auto-enrolling employees first. The staging date for smaller companies is likely to be in 2016 and HMRC will be in contact with individual businesses to inform them of their staging dates.
Can Staff Opt Out?
Employees have to be enrolled before they can opt out – and they only have a one-month window to decide. They must make an informed and voluntary decision and then submit an opt-out notice to their employer. If they opt-out they will be automatically re-enrolled every three years and must opt out again if they still do not want to be part of the scheme. This is because the Government wants to ensure that everyone has a pension pot when they retire.
There are a number of benefits of a workplace pension, including the fact that an employer contributes to the employee’s pension pot and that tax relief is available. If an employee leaves their job, their pension moves with them.
What Information Do Employers Have To Provide?
Employers must provide each category of employee with the information about their right to be auto-enrolled, or to opt in to another pension scheme that meets the Government’s requirements. They also have to give information about their eligible employees to the auto-enrolment pension scheme they have selected.
Information has to be provided within a month of the employee’s auto-enrolment date, so businesses need to plan and prepare in advance.
We would suggest that companies start the planning process 18 months before their staging date to ensure they have time to put everything in place well in advance.
Penalties for non-compliance are severe, and the Government has been very keen to prosecute those companies that have failed to comply.
How we can help
At Else Solicitors, we can provide more information about the employment law aspects of the pensions regulations and advise you of the steps you need to take.
For more information and how we can help with auto enrolment, please contact the HR and employment team on 01283 526200, alternatively you can send us a message and we will get in touch at a time that suits you.