Is Your Business Ready For A Change In The Law on Workplace Pensions?

Welplan - Auto-enrolment imageLatest government figures suggest that millions of people are not saving enough to meet their retirement aspirations, suggesting that the UK is heading for a pensions shortfall. To encourage people to set aside money for their retirement, the government has introduced compulsory workplace pensions for eligible workers.

Pension auto enrolment is being described as the most radical change to workplace entitlements since the introduction of the National Minimum Wage. Every employer in the UK will be required to comply with new legal duties to enrol staff into a pension scheme and make contributions towards it.

When is this being introduced?

Auto enrolment is being phased in over a number of years, from October 2012 (larger employers first, smaller employers last). Each employer will be contacted by The Pensions Regulator and allocated a “staging date” from when their duties will begin.

The “staging date” is based on the number of people in the employers PAYE scheme and those with 250 or more staff can expect to be contacted around now if they haven’t been already.

Businesses with 50-249 staff will have a staging date of between April 2014 and April 2015. Businesses with fewer than 50 employees will have a staging date of between June 2015 and April 2017.

How does Auto Enrolment Work?

An employer must assess each member of the workforce to assign them to a particular category, which will then determine what duties the employer will have to carry out for that worker. After completing the assessment, am employer will know whether the worker is already in a qualifying pension scheme, an eligible job holder, a non-eligible job holder or an entitled worker.

The next steps for an employer are to automatically enrol eligible jobholders, providing them with information on the pension scheme and arranging active membership.

How much must the employer contribute?

All businesses will need to contribute at least 3% on qualifying pensionable earnings, however to help employers adjust, compulsory contributions will be phased in, starting at 1% before eventually rising to 3%

Auto Enrolment requires a financial commitment from every employer in the country and budgets will need to take pension contributions into account – can the costs be accommodated within existing budgets and if not, can savings be made to ensure the firm complies?

LOGO_HIGH_RES_NO_LINESStart Planning Early!

If you haven’t already been advised of your staging date you can find out by visiting www.thepensionsregulator.co.uk

Businesses should start planning and budgeting for pension contributions as soon as possible, no matter when the staging date as Auto Enrolment could take considerable preparation prior to implementation and those who don’t comply will face a range of fines and penalties.

In partnership with HM Wealth Management we have prepared a guide with more information – for a copy of the guide please contact Treena Clarke: [email protected]

To speak to an Advisor personally, please contact Nigel Cruikshanks on 02890 445100.

HMWM is an appointed representative of Johnston Campbell Ltd who is authorised and regulated by the Financial Services Authority

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