Auto-enrolment: What you need to know
As pension auto-enrolment becomes compulsory, find out what your business needs to do
The idea of having a state pension at the age of retirement had always been fairly safe bet. Additionally, many workers chose to take out private pensions to supplement their retirement. However, with a steadily increasing retirement age and life expectancy rising, the government have recognised that the state pension pot will not be sufficient to support the pensioners of the future.
What is Auto-enrolment?
The government introduced auto-enrolment as part of the Pensions Act 2008, to improve pension saving in the UK and ensure that the UK workforce are able to live comfortably with greater financial stability in retirement.
Who is eligible?
Anyone over the age of 22 but under the State Pension Age, earning more than £10,000 pa and employed in the UK is considered eligible.
How does it work?
Under the legislation, employers with at least 1 member of staff are required to enrol those eligible into a pension scheme. Employees are free to opt out if they wish but guidelines state that employers must not actively encourage this.
Auto-enrolment has been introduced gradually, starting with the largest corporations. By law, all UK employers will need to be auto-enrolment ready by 2018 and different deadlines known as staging dates have been set dependent on company size.
Every business must be aware of its staging date, by which they must at least begin communicating with employees about the scheme. For anyone failing to be auto-enrolment ready, the Department of Work & Pensions (DWP) will be issuing fines of up to £10,000+.
Under plans, firms would be charged per day:
|Number of Employees||Fine (per day)|
What do I need to do?
Don’t get caught out. Knowing your staging date is key to ensuring that you have the appropriate plans in place within the required time.
Smart Pensions can help. They’re a workplace pension supplier specifically set up to make auto-enrolment easy for UK businesses.
Find out your business’ staging date here.
Some of the key benefits of Smart Pensions include:
- Completely free to set up for employers with no ongoing fees.
- No admin fees for employees (which increases pension pot returns for your staff)
- 5 star Defaqto rating