AUTO ENROLMENT IS HERE
ARE YOU READY?
For details about how we can start to help you manage this obligatory process book your free initial consultation.
People are living longer lives and this means people can enjoy more time in retirement and need to plan and save for their later years.
The Government estimates that around seven million people are not saving enough to meet their retirement aspirations. Therefore, the Government is making changes to the pension system which, as an employer, will affect you too.
What do the changes mean for employers?
Since 2012, employers have been required to automatically enrol all eligible jobholders into either the National Employers Savings Scheme (NEST) or an alternative ‘qualifying’ or ‘certified’ workplace pension such as a Group Personal Pension – and to make minimum contributions into it.
The process is being staged, dependent on employee head count, from 1st October 2012 to 1st September 2018, with large employers being the first to have to take action.
Who will need to be automatically enrolled?
All job holders working in Great Britain aged at least 22 years old who have not yet reached State Pension age and are earning more than £10,000 a year (2016/2017) will need to be automatically enrolled into either an employer’s workplace pension or NEST.
What is the minimum contribution employers must pay?
Under such qualifying workplace pension schemes (QWPS) employers will need to contribute 3% on a band of earnings for eligible job holders – between £5,824 (the lower qualifying earnings band limit for 2015/2016) and £43,000 (the upper earnings limit for 2016/2017).
This will be supplemented by the jobholder’s own contribution and around 1% in the form of tax relief. Overall contributions will total at least 8% for this type of scheme.
Who can opt in?
Jobholders aged between 16 and 22, and between State Pension age and 75 who are earning more than the above figure, will be able to opt into their employer’s workplace pension and will qualify for the compulsory minimum employer contributions. Those earning below the above figure may opt into their employer’s workplace pension. Their employer will not be required to make a contribution, but may do so if they wish.
When do the changes start?
The changes have already commenced and started in October 2012. Automatic enrolment will be in stages over a period of time, starting with large employers, medium and then small. To help employers adjust gradually, the plan is to phase in the employer contribution levels – starting at 1% and then moving to 2% and finally 3%. The jobholders’ contributions will also be phased in the same period.
What should I be doing now?
As an employer, you should ensure you understand the basic information on the changes as outlined in this letter. A review of existing arrangements should also be undertaken sooner rather than later.
For some firms these changes could be in less than 1 pay review’s time!
A review is also important as The Pensions Regulator, who will oversee the implementation process, does carry the power to levy fines of up to £50,000 on employers who do not take action.
Here at Evolution Financial Services we offer a tailored service to handle all your auto-enrolment needs and requirements. Our advisors are able to deal with all size companies and offer solutions from the whole of the market, we aim to take away the burden and stress which may arise due to these obligatory requirements.