29 November 2011
The Government has announced that it intends to delay the introduction of automatic pension scheme enrolment for millions of workers. In a move designed to reduce the economic burden on firms with less than 50 employees, the start date for auto-enrolment for these employers is being moved back from April 2014 to May 2015. As well as offering respite to smaller firms, the staging dates for employers with up to 3000 employees are also likely to be delayed slightly.
However, it is important to understand the definition of “employee” for these purposes. Employer size will be based on the number of people in the employer’s PAYE scheme on 1 April 2012 and this could include people not working for the employer, for example if final salary pensions are paid through the company payroll. Employers should ensure they understand the impact of their PAYE scheme size on their staging date so that they are not caught off guard by the auto enrolment requirements. Details of the original staging dates can be found here and further information can be obtained via your usual Barnett Waddingham contact or via our auto-enrolment pages.
1. Employers will be required to automatically enrol eligible employees into a qualifying pension scheme with effect from their “staging date". The requirements were due to be phased in over a four year period from October 2012 depending on the size of the employer’s PAYE scheme. The recent Government announcement suggests that the requirements will be phased in over a longer period, although the details of this will not be clarified until January 2012.
2. The minimum contribution requirements will apply to earnings between a lower and upper amount (these amounts are due to be disclosed in January 2012) and will be phased in over the period to October 2017 at which point there will be a minimum contribution rate of 8% of band earnings with a minimum 3% of band earnings coming from the employer.
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