New! Auto Enrolment Planner
for Employers
This planner will help employers understand what their
duties will be when auto enrolment is introduced from
1 October 2012.
Click here to use the Auto Enrolment
Planner for Employers
The Basics
The new employer duties
are planned to come into force from 1 October 2012.
Under these duties, employers will have to:
- enrol workers into a qualifying workplace pension
arrangement;
- choose the qualifying scheme(s) they adopt to discharge the
newly arising duty; and either
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 four years
and will be based on the size of the employer, typically by
PAYE size.
Click here for a schedule of those phasing in
dates.
Minimum Contributions For DC Schemes and NEST
Where a worker is automatically enrolled 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 in 2006/07 terms are 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.
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.
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.
Click here for advice for
EMPLOYEES
Click here for advice for
EMPLOYERS
