The Government has announced a delay to the timetable for rolling out auto-enrolment. Employers with more than 3,000 jobholders will be unaffected but those with fewer employees will not have to auto-enrol their employees until later than originally scheduled. Employers with fewer than 50 employees will not have to auto-enrol their workers until 2025 or later. The phasing in of contributions will also be extended.
Background
The Pensions Act 2008 introduced a requirement for employers to offer their workers a pension arrangement – with compulsory contributions – starting from October 2012. The actual date the requirement comes into effect varies by employer, with generally larger employers having to comply earlier. However, the principle for all employers is that they will have to enrol their workers into a qualifying pension arrangement and contribute 3% of each worker’s earnings into that arrangement, unless the worker opts out. There will be a new national pension scheme called NEST (the National Employment Savings Trust) that may be used for this purpose, although an alternative arrangement may be used if it meets certain criteria.
The Government’s announcement
Employers with over 3,000 people on their largest payroll are due to commence auto-enrolment between October 2012 and July 2013 – and this timetable is unaffected by the latest announcement.
Employers with between 50 and 3,000 people on their largest payroll were due to commence auto-enrolment between August 2013 and July 2014 – and they will see a minor delay in their start date.
Employers with under 50 people on their largest payroll had a range of start dates, from April 2014 to February 2016, the exact date depending on the employer’s PAYE reference. The Pensions Minister Steve Webb has announced that these employers will now not be required to commence auto-enrolment during the life of this parliament – so not before 2015.
Although eventually employees and their employer will have to contribute a total of at least 8% of Qualifying Earnings (including tax relief) to the employee’s pension, initially the total required will be only 2%. This was due to increase to 5% on 1 October 2016 but will now not increase until all employers have been required to start auto-enrolment.
Full details of the revised timetable will be published in January 2012. For further details of the new pensions regime, please click here to read our news article dated 5 November 2010.