Auto-enrolment makes it compulsory for employers to automatically enrol their eligible workers into a pension scheme.
By 2018 all employers will have to automatically enrol their eligible workers into a workplace pension scheme unless the worker opts out. Every employer must automatically enrol workers if they:
· are aged between 22 and State Pension age
· earn more than £10,000 a year
· work in the UK
The government will top up the amounts paid into the pension scheme through tax relief.
The rules also provide for a minimum percentage of ‘qualifying earnings’ (the amount earned after tax between £5,824 and £42,385, or an employee’s entire salary) that must be paid into a workplace pension scheme. The percentages will start at 0.8% for the employee, 1% for the employer and 0.2% for the government, but are set to rise by 2018, when all employers will be required to auto-enrol their eligible employees.
More problems for the little guy?!
The measures are likely to be more problematic to implement for smaller businesses and SMEs, who have fewer resources. The pension regulator recommends that a period of 6-9 months is set aside for planning before your ‘staging date’ (the date in which auto enrolment becomes mandatory) which can be found here http://www.thepensionsregulator.gov.uk/employers/staging-date.aspx
Depending on your type of business, more guidance is given by the Pension Regulator through a step by step guide at http://www.thepensionsregulator.gov.uk/employers/planning-for-automatic-enrolment.aspx