The Government is changing pension legislation and introducing the new Auto Enrolment Scheme. Here is our simple Q&A to explain a bit more about Auto Enrolment and how you can expect it to impact upon your business. 

What is Auto Enrolment?
Currently, many workers don’t take advantage of their employer’s pension scheme because they haven’t completed the relevant application form. To overcome this, workers will automatically be entered into their employer’s qualifying scheme.

Who will be automatically involved?

  • Those not already in the employer’s pension scheme

  • Anyone over the age of 22 years and less than State Pension age

  • Employees that work in the UK

  • Employees that earn over £7,475.00 (this may change due to future government policy)

What are the minimum contribution amounts?
Minimum contribution levels will be phased in between October 2012 and October 

October 2012 to September 2016 
2% of qualifying earnings with at least 1% coming from the employer

October 2016 to September 2017
5% of qualifying earnings with at least 2% coming from the employer

From October 2017
8% of qualifying earnings with at least 3% coming from the employer

Can employees under age 22 years or over the State Pension age join?
Although these employees will not automatically be enrolled, if they are below the age of 75 years and earn over £7,475.00 they can choose to join the Workplace Pension Scheme

When will Auto Enrolment come in?
The Pension Regulator will notify companies of exact dates, however below are the latest dates suggested by the Government.

250 +  October 2012- February 2014
50-249  April 2014 - April 2015
30-49  August 2015 - October 2015
29 and under  January 2016 - April 2017

Will the Government be making a contribution?
The Government will make a contribution in the form of income tax relief from money paid into the pension scheme.

Will employees have the option to op-out?
Employees will be given the option to give notice during the formal op-out period. These people will be put back in their original position before joining the workplace pension.  This may mean being refunded for any contributions that had been paid into a pension.

If you would like more information on Auto Enrolment, including our simple-to-follow flowchart and all the documentation you need, click here.