Pension Auto Enrolment
1st May 2013
You may have heard that the current pension system is undergoing a major overhaul. As of April 2016 the government is introducing a single tier state pension system and the state second pension will be abolished.
The Government wants to encourage all workers to save for their retirement, in as easy a way as possible. Therefore, it has introduced a new law designed to help people save more. They want to make sure everyone has an employer based pension scheme so that they are not reliant on the state pension as a large number of the elderly currently are. Over the next few years every employer will have to automatically enrol all their eligible workers into a workplace pension and both the employee and employer will have to make contributions to the scheme. The Government will also pay into the scheme in the form of tax relief.
Workers will be eligible if they:
· Are at least 22 years old;
· Have not reached state pension age;
· Earn more than a minimum amount a year (currently £9,440); and
· Work, or ordinarily work, in the UK (under their contract).
This is not an issue for larger businesses who already have a pension scheme set up and a HR department to deal with the new legislation. However, for smaller businesses such as ourselves this is going to be a costly headache. The good news is that the large businesses are going first and smaller businesses won’t have to implement these changes until between 2015 and 2018. This calculator will give you the date you will have to start complying with auto enrolment, if you know your payroll reference number:
If you have any questions on this feel free to contact Carol or Gail on 01273 737307.