Auto-enrolment for employers gets under way
Workplace pension law has recently changed. Since 1 October 2012, all employers in the UK will gradually be required to help their employees save for retirement. These measures are being phased in, starting with the largest employers, and should eventually improve the living standards of millions of people in retirement.
What is auto-enrolment?
It’s called this because all eligible employees will automatically become members of a qualifying pension scheme. Auto-enrolment aims to accustom employers and employees to progressively make higher levels of pension contributions in order to improve living standards at retirement. If you are an employer in the UK, you have a major role to play.
What does it mean for employers?
If you own or run an organisation, whether commercial, charitable or voluntary, you'll have to make sure your approach to pensions meets the new legislation.
- If your organisation already has a pension scheme, you will need to speak to your Financial Adviser or pension provider to see if this meets the new government legislation, you may need to make changes your scheme or payment.
- If your organisation doesn't have a pension scheme yet, you'll need to set one up.
If you have a scheme in place Your Financial Adviser/pension provider can help you assess whether or not your current scheme meets the criteria for auto-enrolment, and if not whether you can make changes to the scheme so that it qualifies. If you do not have a pension scheme in place You will need to set one up, the options are:
- Seek professional help and advice - Financial Advisers at Gaeia can steer you through this potential minefield, as the process is unfortunately more complicated than many employers realise.
- Consider using one of the Government initiated schemes such as NEST or The People’s Pension as your scheme (see below), or an alternative provider.
Your organisation’s plan for Auto Enrolment The Pension Regulator can provide your firm with valuable information and you should start to make a plan, briefly summarised below: Now
- Nominate a person within your organisation who will be responsible for auto-enrolment and communication with the Pensions Regulator.
- Find out the implementation deadline for your category of employer – called “Staging Date”. This will depend upon the size of your organisation.
Between now and your staging date
- Assess your workforce against auto-enrolment eligibility criteria (age, employment status etc).
- Start reviewing your pension arrangements well before your staging date.
- Streamline your payroll, HR and finance arrangements.
- Communicate the changes to all your employees
By or before your implementation date Once clear decisions have been made, you will have to:
- Automatically enrol eligible employees into a qualifying pension scheme
- Register with The Pensions Regulator and keep records
- Make a monthly contribution to your employees’ pensions
For more information see: http://www.thepensionsregulator.gov.uk/employers/tools/staging-date.aspx National Employment Savings Trust (NEST) and other comparable pension schemes It was originally anticipated that most organisations requiring a new pension scheme would all join the same scheme, now called ‘NEST’. However, the Government recognises that there are other schemes of comparable value, such as The People’s Pension, and that some existing company pension arrangements are as good as, or more generous than NEST. Any UK employer can use one of these schemes to meet their new workplace pension duties, no matter how large or small the organisation. You can use these schemes as your only scheme, or alongside a scheme you already have in place. They provide online tools to make it easier for employers to fulfill their new duties. An employer can carry out almost all processes through their online account, from enrolling members to making payments. For further information, visit www.nestpensions.org.uk orwww.thepeoplespension.co.uk. If your organisation would like advice on how to successfully implement auto-enrolment, contact Gaeia to speak to one of our Financial Advisers on 0161 233 4550 or email office@gaeia.com. Whether you are an employer or employee, you can also visit https://www.gov.uk/workplacepensions for more detailed information.