Pension Auto-Enrolment
Auto Enrolment is the Governments latest attempt to plug the shortfall in UK pension savings.
Some of the detail is still to be finalised, but in simple terms, the legislation means that all employees will be auto-enrolled in to a work place pension scheme from 2012 onwards.
The new employer responsibilities are built on two principles:
- the auto-enrolment of working individuals into a pension scheme, and
- compulsory pension contributions by employers and employees
Auto-enrolment means that an individual is automatically enrolled into their company's qualifying pension scheme without any action on their part. Under the legislation, this will become a legal requirement for all UK employers.
Employers can choose to auto-enrol jobholders into a qualifying auto-enrolment private pension scheme or into the government's scheme (NEST).
The total minimum pension contribution that needs to be paid into a scheme is 8% of qualifying earnings (band earnings up to a maximum amount), with the employer needing to contribute at least 3%. Please note that qualifying earnings is different from how most employers currently calculate pensionable earnings, as it includes ALL earnings not just basic pay.
Employees will be able to opt out of the scheme, but if they do, they will need to be re-enrolled in to the scheme every 3 years.
For more information about auto enrolment please see our Guide to Auto Enrolment
To discuss further please contact us
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