AUTO ENROLMENT AND WORKPLACE PENSIONS
WHAT IS AUTOMATIC ENROLLMENT?
Auto Enrolment and Workplace Pensions is when a member of staff as an employee meets the requirements and has made a member of a workplace pension scheme without needing to request to be part of it. Historically employees had to decide whether they wanted to join the employers pension scheme.
Since 2012 employees have been required to automatically enrol their employees (who are eligible) into a workplace pension scheme. This is not optional. This means that many more people are able to build up saving seeking used to provide them with pension income from the age of 55.
WHO IS AUTOMATICALLY ENROLLED?
It doesn’t matter whether you have full-time or part-time employees, as an employer you will have to enrol a member of staff in a workplace pension scheme if they meet these rules.
○ If they work in the UK
○ If they aren’t already in a suitable workplace pension scheme and at least 22 years old but under state pension age
○ Earning more than £10,000 a year for the current tax year
Auto Enrolment and Workplace Pensions also applies if the employee is on a short-term contract, paid for by an agency or third-party or if you away on maternity, adoption or carers leave.
For any employee on a workplace pension scheme there is a minimum amount that has to be contributed to the scheme, as well as by you as the employer and the government.
(The government contribution is by way of tax relief), contribution is generally 5% from the employer including tax relief and 3% from you as the employer.
An employee can opt out of your workplace pension scheme at any time, but if they do they will lose out on the employees contribution to the pension contribution and on the government contribution by means of tax relief.