December 11, 2012
Auto-enrolment: what does it mean for you?
Unless you’ve been hiding in a news-free zone for the past few weeks you will know Monday 1st October marked the start of ‘auto-enrolment’ for company pension schemes. But what does this mean for you as an employer, and you as an employee? Annabel Prow, CEO of The Wilson Organisation explains:
“Before Monday 1st October, if an employee wanted to be part of their company pension scheme they had to enrol. And of course this meant that lots of people never actually did it – perhaps because they never got round to it, didn’t understand it or simply couldn’t quite be bothered! With life expectancy increasing and people saving less into their pensions, the government is keen that we all take more responsibility for saving for our retirement.
“So, from now all employees that are eligible for a company pension scheme will be automatically enrolled.
“The 1st October represented the first wave for auto-enrolment, applying only to larger companies – those employing over 120,000 people, such as the big retailers and financial institutions. But the auto-enrolment will filter down relatively quickly and, by 2017, will relate to all businesses – even those that employ just one person. You can see the full timeline of implementation here: http://www.thepensionsregulator.gov.uk/employers/staging-date-timeline.aspx.
“Who counts as an eligible employee? The Department of Work & Pensions (http://www.dwp.gov.uk/) defines eligible employees as being between 22 years old and the state pension age. And they must be earning above the income tax personal allowance level (currently £8,105).
“If you are an employer, you will ultimately need to make a contribution of at least three percent per employee to a suitable pension scheme. And of course you will need to maintain pension provision for those employees who are already in a qualifying pension scheme. The cost implications of auto-enrolment are clearly substantial but, by taking some early action, you can at least plan more effectively for how you can manage your budgets and contributions.
“Many of our clients are taking quite a proactive approach to the new pension regulations and using it as a good opportunity to communicate with staff – as well as a powerful recruitment and retention tool.”
As an employer, it’s essential that you are ready for auto-enrolment and put in place the processes that will satisfy the Pensions Regulator. For more information on the requirements and the steps you need to take, please contact Annabel on 0115 942 0111 or by email: firstname.lastname@example.org