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Auto-enrolment: Where are we now?

The Pensions Act 2008, which came into effect on 1 October 2012, for the first time placed a legal duty on employers to enrol most ‘Jobholders” (defined as anyone working in Great Britain, between the ages of 16 and 75 who meet the qualifying earnings criteria) into a pension scheme and contribute towards their retirement. 

Employer must auto-enrol all Jobholders into a Qualifying Workplace Pension Scheme (QWPS) if they are:

  • Over 22 years but below state pension age (please note that workers aged between 16 and 75 can request to be opted in however the employer does not have to have any contributions on their behalf). 
  • Earning £9,440 or more for 2013/2014 (£7475 in 2011/12 and £8,105 for 2012/2013). 

This must be done within 3 months of commencing work.

What contributions does the employer have to make in a QWPS?  

  • By 1 October 2018 the employer and Jobholder must jointly contribute a minimum of 8% of Qualifying Earnings (which is currently set between £5,668 and £41,450) into the scheme. 
  • An employer must initially contribute 1% this is until 30 September 2017, between 1 October 2017 and 30 September 2018 this increases to 2% and thereafter it is 3%.

Can a Jobholder opt out?  

  • The Jobholder can opt out within 30 days of enrolment, but the employer must not encourage or suggest this course. 

Employers should take the following steps if they need to implement a QWPS by 1 October 2013:

  • Assessing the workforce to ascertain who qualifies for auto-enrolment. 
  • Deciding what type of pension scheme they wish to incorporate. 
  • Review existing pension schemes in order to establish whether they meet the requirements of the Pensions Act.
  • Finalising opting in & out and re-enrolment processes and communication. 
  • Updating employment contracts and employee handbooks
  • You may want to look into whether your existing HR/ Accounting systems will be able to cope with the changes. 

If you are an employer trying to implement a QWPS and need some advice and assistance please do not hesitate to contact me on 0113 350 4030 or at samira.cakali@scesolicitors.co.uk.

Samira Cakali

Samira Cakali is a pragmatic and approachable solicitor advocate with extensive contentious and non-contentious experience in the fields of employment law as well as civil litigation, within a range of commercial businesses from SME’s to multinationals as well as senior executives.

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