Auto enrolment: the basics

Auto enrolment: the basics

Auto enrolment is the name for the legislation that requires employers to provide their employees with a workplace pension. If you’re an employer, you’ll have to set up a workplace pension scheme and make pension contributions for all members of your workforce who meet the criteria for auto enrolment.

What is auto enrolment?

In 2012, changes to the rules around pensions made it compulsory for employers to give their employees the option of joining a workplace pension scheme. These changes have come into effect over the last five years, starting with the largest companies and moving down to anyone who employs another person.

Staging dates are set for employers who were ‘live’ as of 1 April 2012, then those that started up between then and 30 September 2017, with the last staging date set for 1 February 2018.

From 1 October 2017, auto-enrolment responsibilities will start at the same time as PAYE responsibilities.

In order to be eligible for auto enrolment, employees must:

  • Be between 22 and the State Pension age
  • Earn over £10,000 a year
  • Work in the UK

Some employees might not be eligible to be auto-enrolled, but you’ll still need to make minimum pension contributions if they decided to join your workplace pension scheme.

Why was auto enrolment introduced?

A report carried out by the Government in 2005 revealed that not enough people were saving into a pension plan, and that those who were weren’t saving enough for retirement. This prompted the introduction of auto enrolment, giving employees the chance to build up pension savings and benefit from employer contributions.

Is anything going to change?

A review of auto enrolment is due this year. This review will look at the way auto enrolment is working, and assess whether it might benefit from any further changes to make sure people are getting good value.

There’ll also be a phased increase in pension contributions. As it stands, the minimum pension contribution is a total of 2% on the standard contribution basis. This will rise to 5% in April 2018, and again to 8% in April 2019, of which employers must pay at least 3%.

Find out more about auto enrolment

Auto enrolment doesn’t have to be challenging. We’ve got all the information you need to get up and running with your workplace pension scheme.

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