To help workers save for their retirement, there is a legal requirement for employers to provide, and contribute to, a workplace pension scheme for eligible employees.
Businesses must ensure they meet the requirements of auto-enrolment when employing new staff members who meet the requirements.
Who will it affect?
Anyone aged from 22 to the state pension age earning over £10,000 per annum will be automatically enrolled in their employer’s pension scheme.
Those who fall below this threshold can still join and receive employers’ contributions, but employers are under no obligation to enrol them automatically.
Those aged under 22 will automatically join the scheme when they either reach that age or start earning above the threshold.
Employees can choose to leave a scheme at any time and any pension built up will stay in place, although they won’t be able to get their contributions back. They can also rejoin at any time.
Do employers have to re-enrol staff?
Re-enrolment and re-declaration must be completed every three years. Employers must re-enrol staff who left the workplace pension scheme, or reduced their contributions, back into the scheme and complete a re-declaration of compliance.
Auto-enrolment declarations must be completed within five calendar months of the third anniversary of the business’s original staging date.
How much must employers pay into employee’s pensions?
Pension contributions must amount to at least 8% of an employee’s salary, with at least 3% coming from the employer.
It is up to the employer whether they contribute the remaining 5% or whether this contribution is made by the employee.
Although 8% is the minimum total contribution, an employer can offer a more generous pension entitlement should they wish to.
Typical contributions are usually:
- 5% from the employee’s wages:
- 4% from the employee, and
- 1% from the Government in tax relief
- 3% on top from your employer
Which provider should an employer use?
Employers can choose which provider to use. NEST, the National Employment Savings Trust, is just one possible provider of pensions via automatic enrolment. It may not necessarily be the best scheme for your business. We will fully investigate the market and can advise on appropriate options for you.
How can Lamont Pridmore Asset & Wealth Management help?
At Lamont Pridmore Asset & Wealth Management, we can assist employers with the implementation and ongoing management of the auto-enrolment and workplace management rules.
We can take care of everything for you, from helping you find the most appropriate scheme for your business to ensuring you continue to meet your obligations in terms of record-keeping and reporting.
By alleviating this burden, you are free to focus on what you do best – running and growing your business.
Contact us to arrange a no obligation introductory meeting to discuss your financial planning needs and how we can help you in more detail.