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Heriot Hughes Workplace Pensions

Workplace Pensions


Why has workplace pensions been introduced ?



It has long been recognised that most people are not saving enough for retirement and, as a result may not be able to afford to live comfortably in their retirement on just the State Pension. As people are also living longer, there is increasing strain on the State benefits system, so private pension provision is becoming increasingly important.

When does automatic enrolment start?



Workplace Pensions was introduced in 2012 and is being introduced in stages up until 2018. The largest employers started first, followed by medium-sized and then small employers.  By 2018 all employers will have to automatically enrol their eligible workers into a workplace pension scheme unless the worker opts out. As a result, many more people will be able to build up savings to help cover their retirement needs.

Who will be automatically enrolled?


Whether you work full time or part time, your employer will have to enrol you in a workplace pension scheme if you:

    Are not already in a suitable workplace pension scheme
   
Are at least 22 years old, but under State Pension age
   
Earn more than £10,000 a year (tax year 2015-16)
   
Work in the UK


How much will the employer and employee have to contribute ?



The contribution rate is the percentage of pensionable pay which both employers and employees must pay into their new Pension.  The contributions are being phased in, starting at 2% of specified band earnings of which 1% must come from the employer.  The goal for the minimum rate of pension contribution is a total rate of 8% of specified band earnings, of which a minimum 3% must come from the employer.

Why Plan now ?



It is estimated that pre auto-enrolment 6,000 pension schemes per year were set up by the pensions industry. The peak demand for auto-enrolment is expected around October 2017 when it is predicted that over 132,000 businesses will be expected to register for auto-enrolment (Source The Pensions Regulator).

With that level of demand, is your current pension provider going to be able to deliver everything you need to be compliant and indeed, are they still going to want to keep your business?

Staging Dates



Workplace Pensions come into force from a specific 'staging date', staging dates vary depending on the number of employees an employer had under their PAYE reference number as at April 2012. For example, a company with 100 employees will have a staging date of 1st May 2014. All employers should be aware of their staging date. For employers with multiple payrolls their largest payroll will dictate their staging date.