You may have heard about government legislation that will be introduced from 2012 but the details do not seem to be common knowledge. New Review site, Workplace Pension, have put together a breakdown of the new rules which will affect all companies and their staff over the next 5 years.
The basic intention is for all employers to pay into a workplace pension on behalf of their employees. There will also be a requirement for all members to make a contribution to their plan aswell. The aim is for people to fund a pension scheme in order to provide a sufficient income in retirement.
Employees need to be between 22 years old their state pension age and earn over £7,475 per year to become eligible for auto-enrolment, where the company has to pay into the plan on their behalf and if the member does not want to be part of the scheme then they have to actively ‘opt out’. Similarly if a person does not qualify as en eligible member then they can opt into a workplace pension scheme but their employer would not be required to make a contribution aswell.
Administering the pension schemes could be the biggest difficulty for employers because they have to ensure their paperwork and reporting duties are compliant in the eyes of The Pension Regulator (TPR). Employers need to keep a record of the members of staff who are eligible to join the scheme, documentation to show that all members were automatically enrolled and a log of those who have chosen to opt out.
Workplace pensions are changing and the impact on companies, individuals and the UK economy could be significant. The best advice would be to ensure you are prepared for your responsibilities from 2012.
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