Automatic Enrolment is a new legal duty that requires you to automatically enrol your employees into a pension scheme. Sage have produced the following information to help you discover what it means for your business:
People are living longer and are likely to sustain a longer retirement. Many people are not saving for their retirement at all, and many who are saving, aren’t saving enough.
New legal duties, from October 2012, will require employers to automatically enrol their eligible jobholders into a qualifying pension scheme. The reform will be ‘staged’ over a six year period depending on the size of the employer.
What is Auto Enrolment?
Auto Enrolment is a set of duties to make sure all eligible employees automatically become members of a qualifying pension scheme with a high enough level of contributions.
This means new responsibilities for the employer such as:
- Provision and Auto Enrolment into a qualifying scheme
- Facilitating opting out and refunds
- Record keeping
- Any employer with a PAYE scheme registered before 1st April 2012 will have enrolled their staff by April 2017
- Any employer with a PAYE scheme registered from 1st April 2012 will have enrolled their staff by February 2018
Why is the Department for Work and Pensions introducing Auto Enrolment?
- The Government estimates about seven million people are not saving at all for retirement, or not saving enough.
- Life expectancy is increasing – people will live longer in retirement and the size of their pension fund needs to be greater to fund this.
- The Government may not be able to afford to keep state pensions at their current level in the longer term.
The seven steps to enrolment:
1. Know your staging date – when you act
The date that the new law applies to your company is known as your sta