From April 2012 employers will be required to provide a pension scheme for their employees.
The criteria are
- Employees must be aged 22 or more
- Earnings must be more than £7,475 a year (equivalent to the personal allowance from 2011)
If as an employer you do not provide an approved workplace pension scheme employees must be enrolled automatically into the National Employment Savings Trust (NEST).
The new pension programme will begin next year, with automatic enrolment starting in October 2012. There will be a phased introduction with the largest employers having to sign up from 2012 with smaller employers joining up over the period to 2016.
Employers who do not make payments on behalf of their employees could be met with penalties from the Pensions Regulator.
Under the new scheme employers and employees are both required to make contributions under the scheme. This too is being phased in as follows
- Up to October 2016 - employees 2% employers 1%
- October 2016 to September 2017 - employees 3% employers 2%
- September 2017 onwards - employees 3% employers 4% and a 1% tax relief from the government
The auto enrolment plans have changed though and unless an employee specifically wants to sign up earlier the employer is not obliged to auto enrol them until they have three months of service. This will significantly help employers with casual and short term staff.
Another one of the changes has been to simplify the process by which employers certify that their own money-purchase pension scheme meets HMRC's requirements.
If you'd like to find out more about how you can ensure your current workplace pension scheme is compliant please contact us and we will ask one of our pension experts to contact you