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Pension Auto-enrolment

Posted on 30th September 2012
New legislation

From 1st October 2012, over the next four years, all employers in Great Britain are required to automatically enrol eligible jobholders into a pension scheme. Larger employers will be affected first, smaller employers and new businesses have more time to comply.

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Simon Quantrill Simon
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Key changes

1. Employers will be required to automatically enrol "jobholders" into a pension scheme.
2. Jobholders will be free to opt out of membership once they have been enrolled.
3. Employers will be required to make minimum contributions to jobholders' pension schemes (3% of band earnings each year, to be phased in over five years - for 2012/13 the qualifying earnings band runs from £5,564 to £42,475. Jobholders will be required to contribute 5% of band earnings, again to be phased in over five years).
4. The stakeholder pension requirements will be abolished.
5. On 25 January 2012, the DWP issued a revised timetable of staging dates for auto enrolment which contains details of the delay in implementing staging dates for "small businesses".
  • Small employers (fewer than 50 employees) will be allocated staging dates between 1 June 2015 and 1 April 2017.
  • Medium-sized employers (between 50 and 249 employees) will be re-allocated staging dates between 1 April 2014 and 1 April 2015.
  • All employers with an existing auto-enrolment staging date on or before 1 February 2014 will be unaffected.
6. To be eligible for auto-enrolment, a jobholder must be between age 22 and state pension age and must earn at least £8,105 pa (in the 2012/13 tax year).

7. Employers can choose to use a three-month postponement period before a jobholder is enrolled.

8. "Jobholders" include permanent and temporary employees and agency workers.

9. As from 30 June 2012, employers are not allowed to induce jobholders to opt out of scheme membership or make job offers conditional on opting out.

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