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Employers’ pension obligations – September 2012 update

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Employer pension duties

September 2012 introduces new duties for employers regarding pensions. This summary (prepared by Active Solutions HR Consultants) gives you the basics so that you can consider what professional help you need.

UK Pensions Situation

As the UK population is living longer and the pension pot is becoming more stretched, the government is encouraging people to take more personal responsibility for saving. From September 2012 large employers are expected to automatically enrol certain employees into a pension scheme and make a contribution. Over the next few years all businesses will be required to comply with this change in law.

When the 2012 pension changes affect you

This depends on how many people you employed on 1st April 2012. Employers with fewer than 30 staff will be affected between September 2016 and April 2017; those with 62-89 staff 1st May 2014; and those with 62 to 89 staff will be affected on 1st July 2014. The Pensions Regulator will contact you between 6 and 12 months before the date your business will be affected.

What employer pension duties will be

You must:

  • Provide a qualifying pension scheme
  • automatically enrol all eligible employees
  • make a contribution
  • tell all eligible employees scheme details
  • register certain details of the scheme with the Pensions Regulator

You must NOT:

  • encourage staff to opt out
  • bias your recruitment so potential staff agree to opt out
  • treat workers unfairly or put them at a disadvantage because of automatic enrolment

Who this applies to (eligible workers)

Workers who:

  • Earn more than the minimum earnings threshold (currently £5,564)
  • Are aged between 22 and state pensions age and
  • Work in the UK

What contributions will be expected

Ultimately you will be expected to contribute at least 3% of their earnings and you can pay more if you wish. The worker will also be expected to contribute a total minimum contribution of 8%. Initially employer contributions will be 1%. The time scale for increases will be confirmed nearer the time.

If you already have a pension scheme

Your current pension scheme may already qualify. Find further details here

If your current scheme does not qualify then the advice of a financial adviser is recommended.

Useful links:

Active Solutions HR Consultants

The Pensions Advisory Service: www.pensionsadvisoryservice.org.uk

Financial Services Authority: www.moneymadeclear.fsa.gov.uk

Department for Work and Pensions: www.dwp.gov.uk/policy/pensions-reform