Auto-enrolment pensions advice for employers

On October 1 2012 the auto-enrolment process for pensions started and now all UK employers will have to automatically enrol any eligible workers into a pension scheme.

The enrolment scheme is being implemented gradually with enrolment happening month-by-month for the next five years, depending on the number of employees.  The first employers to whom the October 1 2012 deadline applies are very large companies.

All eligible workers will have to be enrolled. That is anyone aged between 22 and state pension age and who earns more than £8,105 per year. They can opt out of the pension scheme, but they will be auto-enrolled every three years and will have to choose to opt out again if they so wish.

If an employee is already a member of a pension scheme then they will not have to be enrolled as long as the scheme they are a part of is a qualifying scheme.

An employee and employer will have to contribute a minimum percentage to the pension schemes. As with the enrolment process, this will be staggered and increased gradually. At the outset, both employee and employer will have to contribute one percent each. This will then increase gradually so that by October 1 2018, the employer will contribute three percent and the employee five percent.

It is worth noting that an employer who wilfully fails to comply with key dates for implementation will be guilty of a criminal offence liable to imprisonment and/or a fine.

Therefore, it is of crucial importance for employers to identify the implementation date applicable to their business and ensure arrangements are put in place in good time.

If you would like to discuss this or any other employment law matter, please contact our Employment team on 01772 258321.