In recent times, the Government has become concerned that people are not saving enough for their retirement, so changes are being made to the pension system.
Shortly, employers will be required to automatically enrol eligible job holders into a qualifying workplace pension, and make minimum contributions into it.
Don’t be put off by the jargon! Below we will explain how this will affect employers.
What is an eligible job holder?
An eligible job holder is a job holder aged at least 22 years old, who hasn’t reached State Pension age, and earns more than £7,475 per annum. These job holders must be automatically enrolled into the employer’s workplace pension scheme.
Job holders between 16 and 22 who are earning more than £7,475, or any employee earning below £7,475 can opt in to the employer’s workplace pension if they wish.
What is a qualifying workplace pension?
Employers can choose the pension scheme (or schemes) they want to use – including their current pension scheme if one is already set up – providing it meets certain quality criteria.
When will I be affected?
Changes are planned to start from 2012, and will be phased in, starting with large employers, then medium, and then small. To help employers adjust to these changes, the employer contribution levels are also to be phased in, starting at one per cent, then rising to two per cent, and finally reaching three per cent.
Employers with less than 50 employees will be phased in as of August 2014.
The Pensions Regulator plans to write to employers around 12 months in advance of theirs automatic enrolment start date.
We recommend that you speak to an independent financial advisor before making any decisions regarding pensions. Please feel free to contact Axel on 01565 755255 or via email at blog@axel.co.uk should you require any further information.
The figures stated on this page are subject to pending legislation.
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