The government launched a recent media campaign around a new pension scheme which would be introduced to all workplaces, but what does this mean for you, your business and your employees?
The new scheme is called automatic enrolment, or auto enrolment for short and depending on the size of your business and how many employees you have, you will have a time frame to introduce this for all your employees.
The Great Pension Roll-out
The scheme will be introduced to all businesses over the next six years and you will need to offer a pension scheme to anyone who meets the criteria, which are:
- Over 22 years old and younger than state pension age
- Earning over £9,440
- Working in the UK
As an employer, you will need to make a contribution to each of your employees’ pension and the amount will depend on how much your employee earns. If you have an existing scheme, this may not actually comply with auto enrolment, so don’t just assume because your employees have a pension scheme already that you do not have to take action.
Prepare Your Pensions
Large employers who have at least 120,000 employees have already had to put auto-enrolment in place, and this has been working for them for over a year, but the government has allowed small and medium sized businesses (SMEs) more time to prepare for these changes. You should check the timescales to make sure that you comply because if you don’t, or you are late with your preparations, you may face a fine or other action against you from the Pension Regulator.
As many people are not preparing for their retirement the government came up with the idea of auto enrolment to push people into making proper preparations for when they are unable to work anymore. whilst the scheme is called auto enrolment, your employees do have the option to opt out of it if they choose to. You should ensure that you are up to date with auto-enrolment, and early preparation is the key to not being caught out.
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