As of October 2012 the auto enrolment pension legislation has been introduced. It means that as opposed to the worker choosing to join a pension scheme the employer will be automatically enrolling employees that are eligible into a work place pension from a provider like Now Pensions. The worker still has the choice to opt out, but it means that your employer will now have the responsibility of enrolling their workers based on eligibility.
Employers may already have pension arrangements for their workers, but they must now ensure that they meet the new requirements. The existing scheme should be reviewed and discussed with the pension provider. A business will be written to and notified of its ‘staging date’ 12 months and then 3 months prior to the date, which is expected to give them enough time to implement any necessary changes.
After auto enrolling their workers, they must pay contributions into the pension scheme of a minimum of 3 percent of the workers earnings, or more if the employer wishes. The employer must make regular payments into its staff pension schemes.
The workers should make sure they know the eligibility requirements. They must work in the UK under a contract in order be eligible for the auto enrolment scheme. Temporary workers are included in this as well. They must also be between 22 and state pension age, and must earn above the small earnings bracket (£8,105).
The reason for the new pension legislation is that people are living much longer than they used to, so it’s more important than ever to ensure that we have a pension fund to rely on to take care of us in our later years. The scheme is an excellent way of helping people to save and making it easy for them to do so.