What is the Workplace Pension/Auto Enrolment?
The Workplace Pension, also referred to as Auto Enrolment, has been introduced by the Government to help more people save for their future. This means the employers will have to automatically enrol some workers into a workplace pension plan and give others the option to join.
- Auto Enrolment is a legal requirement and hefty fines are imposed for non-compliance
- Each employer will be given a staging date to determine when their duties first apply
- Staging date is based on the number of employees, companies with a larger workforce will stage earlier
- The Pensions Regulator (TRP) will tell companies when their staging date is 12 months beforehand and send a reminder 3 months before.
- Employers can choose to bring their staging date forward to coincide with other key company dates, such as end of year accounting
- The minimum contribution an employer is required to make is initially 1% of the employees salary. From 6th April 2018 this will rise to 2% until 6th April 2019 when it will reach 3%
Why opt in to Auto Enrolment?
Auto Enrolment is a choice that only employees can make. An employer would be breaking the law if they were to ask or force a member of staff to opt out. For most people, staying in or opting in to a workplace pension is a good idea. This is because an employer has to make a contribution to the scheme as well as the employee making their own contributions. An employee will also receive tax relief on contributions made into the scheme.