Workplace pensions and automatic enrolment

The Government wants to encourage more workers to save for their retirement, rather than simply relying on what is becoming an increasingly smaller state pension. It wants all employees to be automatically enrolled into a workplace pension scheme, if they are not already in an equivalent scheme, with employers required to contribute to each individual’s pension fund.

Who will it affect?

Anyone aged from 22 to the state pension age earning over £10,000 P/A 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 unless they opt out within 30 days of joining.

When will I have to start automatic enrolment my employees?

All employees will be enrolled into a scheme by 2018. You may have already been advised of your staging date by the Pensions Regulator but for further information or clarification please contact us.

How much will I have to pay in?

Between October 2012 to September 2017, employees will pay in a minimum of 1% of their salary (tax relief is applicable to this). As an employer, you will top this up to a minimum of 2% in total. The minimum total contribution will rise to 5% from October 2017 to September 2018 with at least 2% coming from the employer, and from October 2018, a further increase to 8% with at least 3% coming from the employer.

What if I already offer a workplace pension scheme?

Provided your existing scheme meets the minimum standards for automatic enrolment then you can continue to use it, although you will need to register it with The Pensions Regulator (TPR) within four months of your start date. You will need to re-register every three years.

Which provider should I use?

As an employer, you can choose which provider you 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 the best option for you.

What if I don’t want to take part in automatic enrolment?

Automatic enrolment is not optional and, as an employer, you have a duty to offer your employees an appropriate scheme. They can choose to leave the scheme if they wish, but you are legally obliged to offer one in the first place. You could face substantial fines and even imprisonment if you fail to comply.

How can Lamont Pridmore Asset & Wealth Management help?

At Lamont Pridmore Asset & Wealth Management, we recognise that automatic enrolment will place an additional burden on many smaller businesses in the form of new processes, record keeping and reporting requirements. Thankfully, we can take care of everything for you, from helping you find the most appropriate scheme for your business through to ensuring you meet your obligations in terms of record keeping and reporting. By taking this burden from you, we leave you free to focus on what you do best – running your business.

Automatic Enrolment

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