An easy guide to the 2012 Pensions Reform – Auto-Enrolment

This year will see the start of the introduction of an employer’s responsibility to automatically enrol eligible staff (*) in to a qualifying pension scheme.

 So what are the employer’s responsibilities? 

-          Assess any existing pension scheme that they offer to staff – does it qualify (#)?

-          Update an existing scheme / provide a qualifying pension scheme

-          Pay employer contributions and employee contributions via payroll

-          Let eligible staff know that have been enrolled and they have the right to opt out

-          Register with The Pensions Regulator and provide details of your pension scheme and the number of staff who are enrolled

 When are the changes coming in?

(*) Eligible staff

- those that work or ordinarily work in the UK

- aged between 22 and state pension age

- earn more than the lower Income Tax threshold (£8,105 proposed for 2012/13)

- those earning more than a proposed £5,564 will also be eligible but the employer will NOT be obliged to contribute

How much needs to be contributed (# – qualifying schemes)?

Be sure to plan ahead

 -          As part of your business plan, ascertain your staging date

-          Get an existing scheme(s) reviewed. Is it qualifying?

-          Assess your workforce and budget for the potential increase in your pension costs

-          HR workload and costs will increase – and how to reduce this increase?

-          Let your workforce know what’s happening and when

It’s always useful to seek independent advice to help manage the transition to the new rules and most importantly to keep the costs to your business to a minimum.

Please note that the above is given for information purposes and does not constitute financial advice.

Author: Ian Marsh, Tait Walker Wealth Management

Tait Walker Wealth Management are authorised and regulated by the Financial Services Authority.