Pension auto-enrolment

Due to widespread concerns over inadequate pension savings in the UK new obligations have been introduced for employers to ensure employees and workers save up for retirement.

Under the Pensions Act 2008 (and the subsequent supplementary Regulations) all employers will be required to automatically enrol all eligible jobholders in a pension scheme and pay a minimum level of pension contributions.

Different Staging Dates depending on number of Employees in the Company
The relevant date for the auto-enrol obligations will depend on the size of the employer’s business and the ‘staging date’ allocated to that employer. Once an organisation has reached its relevant staging date it is under an obligation to enrol all jobholders in an automatic enrolment scheme as soon as the jobholder satisfies the qualifying criteria (this relates to both existing jobholders and new jobholders employed in the future).  However, if the jobholder is already a member of the employer’s pension scheme (and it is a qualifying pension scheme) there will be no obligation of auto-enrolment.

Definition of a Jobholder and the Qualifying Criteria
For the purposes of the auto-enrolment provisions, a jobholder is an employee or worker who works in the UK under a contract (either written or verbal), is aged at least 16 but under the age of 75, and who receives qualifying earnings (minimum £5,564 during a 12-month reference period (2012/2013 rates)).

Jobholders are eligible for auto-enrolment (the Qualifying Criteria) when:

  • they are aged between 22 and the state pension age;
  • they have earnings above the annual earnings trigger (£8,105 a year for the 2012/2013 tax year); and
  •  they are not already a member of the employer’s qualifying pension scheme.

Employer’s Minimum Contribution
Under the auto-enrolment provisions employers are required to contribute to the pension scheme as follows:

  • From the employer’s staging date and until 30 September 2017: 1%;
  • From 1 October 2017 to 30 September 2018: 2%; and 
  •  From 1 October 2018 onwards: 3%

The Relevant Staging Dates
The dates on which organisations are required to auto-enrol eligible jobholders will depend on the size of the organisation’s PAYE scheme or reference number. The following is a summary of the staging dates:

  •  1 October 2012: organisations with more than 120,000 employees in the UK;
  •  1 November 2012 – 1 November 2013: those who have between 500 and 119,999 employees;
  •  1 January 2014 – 1 February 2014: 250-499 employees;
  • 1 April 2014 – 1 July 2014: 62-249 employees;
  •  1 August 2014 – 1 April 2015: 50-61 employees;
  • 1 June 2015 – 1 April 2017: less than 50 employees;
  • 1 May 2017 – 1 February 2018: New employers who did not have any PAYE income payable before 1 April 2012.

At ebl miller rosenfalck we specialise in advising on employment law and if you have any questions relating to your organisation’s obligations under the auto-enrolment provisions, please do not hesitate to contact us.

The material contained in this article is provided for general purposes only and does not constitute legal or other professional advice. Appropriate legal advice should be sought for specific circumstances.

© , September 2012

Please contact:

Sara Kennedy - Solicitor

DD +44 (0)20 7553 9937

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