This is a process whereby employees are automatically entered
into a pension scheme without any form of application on their
part. Many employees fail to join valuable pension schemes where
they first have to initiate an application process. Auto-enrolment
is meant to overcome this obstacle.
When the pension reforms are introduced in 2012, all eligible
employees will have to be auto-enrolled into a qualifying pension
scheme. Employers will be able to choose which qualifying scheme to
use, including the new National Employment Savings Trust (NEST).
All qualifying schemes must meet minimum standards, either of the
benefits it provides or the amount of contributions paid to it, and
must also provide auto-enrolment for all eligible employees who
have not already joined the arrangement and for all new employees
when they become eligible.
In a move to encourage saving for retirement, the Government is
introducing a new low-cost saving scheme - National Employment
Savings Trust (NEST). It is to be introduced from 2012 and
employees who do not offer access to a suitable alternative pension
arrangement will be able to use personal accounts for their
employees.
Employees will be automatically enrolled in the scheme but will
have the opportunity to say they do not want to join. They will
also be able to come out again at a later date if they want to.
Contributions will be paid by employees and employers and
invested in a range of funds. At retirement, the accumulated fund
will be used to provide an income for the member's lifetime.
Members of the scheme and their employers will be able to pay
additional contributions above the specified levels. However, there
will be an overall limit on the total amount that can be invested
in the scheme each year. At present this limit has been set at
£3,600 pa.
The scheme will be run by a board of trustees. The trustees will
run the scheme independent of Government and the scheme will be
regulated by The Pensions Regulator in common with all other
occupational pension schemes.
You will have to auto-enrol into the National Employment Savings
Trust (NEST) any eligible employee. An eligible employee is one who
is between 22 years of age and State Pension Age and earns more
than a certain minimum (around £5,000pa) unless:
- he/she is a member of your final salary pension scheme that
meets certain minimum standards, or
- he/she is a member of your money purchase pension scheme and
there is a minimum level of employer contributions, or
- he/she is a member of your personal pension plan or stakeholder
pension scheme and there is a minimum level of employer
contributions.
If an eligible employee is not an existing member of one the
schemes mentioned above, he/she must be either auto-enrolled in the
NEST or in your employer's pension arrangement provided that
arrangement meets certain minimum conditions as to the benefits it
pays or the level of contributions paid to it.
At present, although employers can auto-enrol employees into an
occupational pension scheme, they cannot auto-enrol employees into
a WPP. However, from 2012, employers can choose to auto-enrol
eligible employees into either an occupational pension scheme or a
qualifying Workplace Personal Pension.
There is no requirement to auto-enrol in any pension arrangement
an employee who does not meet the eligibility conditions.
No, as long as the final salary scheme meets certain minimum
standards as to the level of benefits it provides you will not have
to do anything in respect of those employees who have already
joined the scheme. If you introduce auto-enrolment into your scheme
for all new employees and those existing employees who are not
currently members of the scheme you will be exempt from having to
use the National Employment Savings Trust (NEST).
You may have employees that are not eligible to join your final
salary scheme. Any such employees must be enrolled into the NEST if
they are between 22 years of age and State Pension Age and earn
more than around £5,000 per annum.
No, as long as the money purchase scheme meets the minimum
contribution rate test and it operates auto-enrolment for eligible
employees. If it does not meet this test, or does not operate
auto-enrolment, you are not exempt from enrolling into the National
Employment Savings Trust (NEST) those employees who meet the
eligibility conditions, i.e. are aged between 22 and State Pension
Age and earn a minimum amount (around £5,000 pa).
You may have employees that are not eligible to join your money
purchase scheme. Any of those employees (if they are not already in
a final salary, stakeholder or GPP arrangements - see Q3) must be
enrolled into the NEST if they are between 22 years of age and
State Pension Age and earn more than around £5,000 per
annum.
Provided your scheme meets certain minimum criteria with regard
to the level of contributions, you will not have to do anything
about those who have joined it.
From 2012, employers can choose to auto-enrol their employees
into a qualifying stakeholder pension scheme.
Provided your scheme meets certain minimum criteria with regard
to the level of contributions, you will not have to do anything
about those who have joined it.
From 2012, employers can choose to auto-enrol their employees
into a qualifying GPP.
Yes. You may decide to close your final salary scheme at some
time in the future. You should first check what contractual rights
your employees have before withdrawing this scheme and there is a
consultation process you must go through. If the final salary
scheme continues as a 'closed' arrangement, you will still be
responsible for the existing regulatory requirements, such as
scheme funding.
From 2012, you will have to enrol the affected employees into
the National Employment Savings Trust (NEST) unless you replace it
with another exempt arrangement.
If you withdraw this scheme before 2012, you may need to meet
access requirements for stakeholder pension schemes. If you have
five or more employees, you must offer access to a stakeholder
pension to all your relevant employees.
Yes. You may decide to close your money purchase scheme at some
time in the future. You should first check what contractual rights
your employees have before withdrawing this scheme and there will
be a consultation process you must go through.
Unless you replace it with another exempt arrangement you will
have to enrol your eligible employees into the National Employment
Savings Trust (NEST).
If you withdraw this scheme before 2012, you may need to meet
access requirements for stakeholder pension schemes. If you have
five or more employees, you must offer access to a stakeholder
pension to all your relevant employees.
Yes. You may decide to close your stakeholder scheme at some
time in the future. You should first check what contractual rights
your employees have before withdrawing this scheme and there will
be a consultation process you must go through.
Unless you replace it with another exempt arrangement, you will
have to enrol your eligible employees into National Employment
Savings Trust (NEST).
If you withdraw this scheme before 2012, you may need to meet
access requirements for stakeholder pension schemes. If you have
five or more employees, you must offer access to a stakeholder
pension to all your relevant employees.
Yes. You may decide to close your GPP at some time in the
future. You should first check what contractual rights your
employees have before withdrawing this plan and there will be a
consultation process you must go through.
Unless you replace it with another exempt arrangement, you will
have to enrol the affected employees into the National Employment
Savings Trust (NEST).
If you withdraw this scheme before 2012, you may need to meet
access requirements for stakeholder pension schemes. If you have
five or more employees, you must offer access to a stakeholder
pension to all your relevant employees.
