Automatic Enrolment | Webinar: Preparing for Pensions Automatic Enrolment | Kelly Services
Why is pension legislation changing?
As profiled in the media, workplace pension law has changed making all employers take positive action to help their UK workers save for retirement. They must automatically enrol certain workers into a qualifying workplace pension scheme that the employer will contribute to.
It is estimated there are 23m private sector workers in the UK, of which only 9.6m are contributing to a pension scheme, and only 3.2m belong to a pension scheme where their employer pays an element of the contributions. The government hopes that by making pension scheme membership the default position for workers, this number will increase by up to 8 million.
As an employer you must automatically enrol workers who are:
- not already in a qualifying workplace pension scheme
- at least 22 years old and below state pension age
- currently earning more than £9,440 per annum
- ordinarily working in the UK
Employees can opt out of the pension, with the process managed via a third party and subject to a statutory communication process. If the employee opts out within one month of being enrolled, they can be refunded their contributions. If the employee wants to cancel their scheme membership after the first month they can suspend future contributions, but cannot be reimbursed monies already paid into the pension. Employers have a duty to automatically enrol all employees who are not in a pension scheme every three years.
Workers who do not qualify to be automatically enrolled have the right to ask to be opted in to the scheme, and the employer must allow them to do so.
What are the contributions?
If you choose a defined contribution scheme, the minimum contributions you pay are based on a band of qualifying earnings - between £5,668 and £41,450 for the 2013/14 tax year. These figures will be reviewed every year by the government. The minimum contribution levels for qualifying earnings and certification earnings bases will increase gradually from 2012.
What are the key staging dates?
Automatic enrolment started on 1 October 2012 with individual employer’s duties phased over the following five years based on the employer's size. There will be a maximum three month waiting period before you must enrol your eligible employees. If, however, any employees aged between 16 and 75 want to start straight away they must be enrolled into the scheme immediately.
Between now and staging
- Assess your workforce and the associated legislative requirements
- Review any pension arrangements and decide on your pension partner
- Assess what support your payroll software package can provide and the changes that will need to be made for auto-enrolment
- Inform all your workers in writing about their new rights whether they qualify for automatic enrolment into a workplace pension scheme or not
At staging and beyond
- Automatically enrol eligible jobholders into a pension scheme and write to tell them they have been enrolled
- Register with The Pensions Regulator and keep records
- Contribute to your workers' pensions
At Kelly Services
Our staging date is the first half of 2013 and we have chosen to partner with NEST for our pension provision. Our comprehensive implementation plan incorporates our communication to those most affected – our own staff, Kelly Services Employees and our client partners.
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