Automatic Enrolment 22/05/2015
You may have seen television and newspaper adverts regarding a new pension scheme, Automatic Enrolment. However, the majority of people do not understand what it is, or what they are legally required to do. Automatic Enrolment is a government initiative to help more people save for retirement through a workplace pension. Many employers already offer a workplace pension, but these existing schemes may not comply with the new regulations.
UK employers now have a legal requirement to “Automatically Enrol” staff into a workplace pension, if they meet certain criteria. However, the date by which each employer must comply is different, as the pension regulator is staging the enrolment. By February 2018, it is expected that 11 million UK workers will be enrolled in a workplace pension. The pension regulator should notify you of your staging date in plenty of time. Should you wish to check this staging date before you receive a letter, you can do so online on the pension regulators website; www.tpr.co.uk/staging-date
Employees will be automatically enrolled if they are aged 22 and over, but under state pension age. They must also earn more than the trigger, which is currently £10,000 a year. This figure is reviewed each year. If you earn less than £10,000 in a year, you may opt in. Likewise, if you earn over £10,000 and are automatically enrolled, you have the option to opt out.
Pension contributions will be calculated on qualifying earnings. Qualifying earnings is currently £5,772, again this is subject to review each year. The minimum contributions for an employer will be as follows, 1.0% of your employees qualifying earnings until September 2017 rising to 2.0% from October 2017 to September 2018 then rising to 3.0% from October 2018.
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