Advice For Employers
Although this page includes information about auto-enrolment, we
cannot deal with enquiries from employers. If you are an
employer and are seeking information and guidance on your
responsibilities, we encourage you to contact the Pensions
Regulator. Their website includes a number of interactive
tools.
Click here to visit the Pensions Regulator's
website.
What Is Auto-Enrolment
Auto-enrolment will mean workers being automatically enrolled
into their employer's qualifying pension scheme without any active
decision on their part. At present, many workers fail to take up
valuable pension benefits because they do not make an application
to join their employer's scheme. Auto-enrolment is meant to
overcome this.
From 1 October 2012 (subject to the employer's own introduction
date), all eligible workers will have to be auto-enrolled into a
qualifying pension scheme. Employers can choose the
qualifying scheme they use, which could include NEST (the
National Employment Savings Trust). Each qualifying
scheme must meet minimum standards in respect of the benefits it
provides or the amount of contributions paid to it. The
scheme must also provide auto-enrolment for all eligible workers,
and for all new workers when they become eligible.
The Basics
The new employer duties
are planned to come into force from 1 October 2012.
Under these duties, employers will have to:
- enrol eligible workers into a qualifying
workplace pension arrangement;
- choose the qualifying scheme(s) they adopt to discharge the
newly arising duty; and either
An eligible worker is an employee aged
between 22 and state pension age and earning above the income tax
personal allowance (£7,475 in 2011/12). Contributions
will be payable on earnings between £5,035 and
£33,540.
Employers will also have an ongoing duty to maintain qualifying
pension provision for workers who;
- are already members of qualifying schemes; or
- become members of such schemes.
Gradual Introduction Of Auto-Enrolment
Although new duties come in from 1 October 2012,
individual employers' own duties will
be introduced gradually over the following years
and will be based on the size of the employer, typically by
PAYE size.
The following is a table showing the staging dates for
employerswith 3,000 or more employees. The Government is
revising the staging dates for employers with less than 3,000
employees and further information will appear here early in
2012.
| Employer (by PAYE scheme size) |
Staging Date |
| 120,000 or more |
1 October 2012 |
| 50,000 to 119,999 |
1 November 2012 |
| 30,000 to 49,999 |
1 January 2013 |
| 20,000 to 29,999 |
1 February 2013 |
| 10,000 to 19,999 |
1 March 2013 |
| 6,000 to 9,999 |
1 April 2013 |
| 4,100 to 5,999 |
1 May 2013 |
| 4,000 to 4,099 |
1 June 2013 |
| 3,000 to 3,999 |
1 July 2013 |
There will be a three month waiting period before employers are
required to enrol workers into their designated scheme. During this
period, workers can choose to opt in to start saving straight
away.
The largest employers who are due to auto-enrol between 1
October 2012 and 1 November 2012 will be allowed to start
auto-enrolment from as early as July 2012 to avoid the Christmas
period.
Employers will be given the flexibility to re-enrol workers
three months either side of their automatic re-enrolment date.
Minimum Contributions For DC Schemes and NEST
Where a worker is automatically enrolled in a
defined contribution (DC) scheme or NEST, there will be
a minimum contribution of 8% of qualifying earnings, of which
the employer must pay a minimum of 3%. If the employer
chooses to pay the minimum 3%, the worker will pay 4%, with a
further 1% paid as tax relief by the government. (Qualifying
earnings is earnings between £5,035 and
£33,540).
However, these minimum contribution levels will be phased in
between October 2012 and October 2017.
- October 2012 to September 2016 - total minimum of 2% of
qualifying earnings with at least 1% from the employer.
- October 2016 to September 2017 - total minimum of 5% of
qualifying earnings, with at least 2% from the employer.
- From October 2017, total minimum of 8% of qualifying
earnings, with at least 3% from the employer.
Opting Out
Workers will be able to opt-out of their employer's scheme if
they choose not to participate. Workers who give notice
during the formal opt-out period will be put back in the position
they would have been in if they had not become members in the first
place, which may include a refund of any contributions taken
following automatic enrolment.
Further Information
Auto-enrolment is being regulated by the Pensions
Regulator. Their website contains further useful information,
as well as some handy interactive tools. Click here to be redirected to their
website.
