What is Auto Enrolment?
The Law regarding workplace pensions has changed in recent years; under the Pensions Act 2008, all employers have a legal requirement to help their employees save for retirement by automatically enrolling eligible workers into a workplace pension scheme and contributing towards it.
You will have no doubt seen the adverts in the media regarding Automatic Enrolment. It applies to all businesses in the UK who employ at least one member of staff. The contribution levels that need to be made by both employee and employer are being phased in over time to allow time to adjust budgets. Auto Enrolment is regulated by the Pensions Regulator.
Why is Auto Enrolment happening?
The Government came to the conclusion that it will be impossible to keep the state pension at its current level due to people now living longer than ever. This means that people will need to have bigger pension pots to sustain a potentially longer retirement. By setting up automatic enrolment and raising the profile of pensions, the government is aiming to bridge the gap that is likely to appear in the future, by giving everyone easy access to schemes and allowing them to benefit from employer contributions.
When will it affect my business?
Every employer will have a date by which they have to have their scheme in place. This is generally linked to the number of employees they have and their PAYE code. This is known as a ‘staging date’. Large businesses will have already staged, and all businesses will have staged by 2018 meaning that they should have enrolled all employees by this date. Employees can ‘opt out’ of the scheme if they wish to and employees have the option to defer the staging date for their companies should they need to.
You should get notified well in advance by the pension regulator of your staging date or you can go onto their website and find your own staging date very easily.
If you need help please get in touch.