Pension Auto Enrolment – Are you prepared?

As of October 2012 new employer duties will be coming into effect, requiring employers to automatically enrol employees into a qualifying workplace pension scheme and make contributions on their behalf.

What are my key Auto Enrolment responsibilities as an employer?

  • Employers must automatically enrol eligible employees into a Qualifying Workplace Pension Scheme
  • The pension scheme offered must pass a “Quality Test” in order to meet strict compliance criteria
  • Employers are required to make pension contributions on behalf of eligible employees. Minimum contribution rates, based upon qualifying earnings, are as follows:
    -3% Employer Contribution when fully implemented*
    -5% Employee Contribution when fully implemented*
  • Employees can elect to opt-out, however employers must automatically re-enrol all eligible employees who chose to opt-out every 3 years

Who needs to be Auto Enrolled?

  • Employers have different responsibilities depending upon the age and earnings of the employee (please contact our tax team for details relating to enrollment)

What is a Qualifying Workplace Pension Scheme?

In order to be compliant with Auto Enrolment, the pension scheme used by employers to auto-enrol staff into must meet the following criteria:

  • The scheme must be an occupational, group or personal pension scheme.
  • The scheme must be a UK registered pension scheme.
  • The scheme must satisfy a quality test during the period that any “eligible job-holder” is an active member.

Employers will need to review their existing pension arrangements to ensure their schemes meet quality tests. It is expected that a significant volume of existing workplace pension schemes will be unsuitable for Auto Enrolment in their current state.

When will Auto Enrolment affect me?

The legislation is due to be phased in from 2012. Each employer has been given a date by which they need to comply (known as their ‘staging date), and the date is dependent upon their total number of employees.