Auto Enrolment pensions are mandatory pensions that every company will need to have set up by their staging date. Your staging date will be provided to you by the pensions regulator.
The employee and employer both pay into the pension scheme. The revenue also contributes but allowing tax relief on the employees contributions.
When do these changes come into effect?
A new law means that over the next few years every UK employer must automatically enrol their workers into a workplace pension scheme if they:
- Are aged between 22 and State Pension Age.
- Earn more than £10,000 a year (2015/16 limit – this amount will change each year.)
- Work in the UK.
Start by taking a look at this helpful government website: www.gov.uk/workplacepensions
Every company will be required to offer employees the chance to join a qualifying pension scheme, which both the employee and employer can contribute to.
What will this mean?
Every company must have a qualifying pension scheme in place, in to which employees will automatically be enrolled by the employer. This could be a new pension or an existing pension as long as this pension ‘qualifies’ and also that no restrictions are placed on membership. We will be sending out information on contributions and other details in the coming months. Remember,If a company does not have a qualifying pension scheme then it must introduce one. Employers will have responsibility for ensuring they have a compliant pension scheme in place and that the correct employees and employers contributions are paid into the scheme.
Why is this happening?
The average life span has increased and people are living for longer. The changes to pensions are because the current state pension will just not be enough when retiring and the government are trying to encourage people to save for their retirement.
What will we be doing?
We will be doing everything we can in our payroll software to help you understand and run auto enrolment pensions. We will help you manage and monitor employees, inform pension providers and print/send letters regarding auto enrolment. We would advise you to make sure that you can seek sound and helpful advice from your pension provider or speak with a financial adviser.