New laws that came into force on 30 June 2012 will eventually require all UK employers to automatically enrol eligible workers into a pension scheme and make mandatory minimum contributions on their behalf. The reforms are being implemented gradually starting on 1 October 2012, and although many employers will not become subject to the new auto-enrolment duties for several years, they should take early action to prepare for the reforms.
The new employer duties are being implemented month by month over a five-and-a-half year staging period starting on 1 October 2012, with larger employers required to comply first.
All UK employers have been separated into a large number of bands according to their size, with each band being assigned a particular monthly staging date from which they will be obliged to start the enrolment processes. Large employers become subject to the enrolment duties before small employers. There will be several open months to allow for delays or administrative issues.
Which band an employer falls within will depend on the number of workers in its PAYE scheme on 1 April 2012 (if it operates a single PAYE scheme). If an employer operates more than one PAYE scheme, its staging date will be determined by its largest PAYE scheme on 1 April 2012. The Pensions Regulator has published a staging date timeline to confirm the indicative staging dates that will apply for different sizes of employer, although the exact dates will depend on an employer’s PAYE data. As a general guide, the position is as follows:
- More than 250 employees: staging dates between 1 October 2012 and 1 February 2014.
- Between 50 and 249 employees: staging dates between 1 April 2014 and 1 April 2015.
- Fewer than 50 employees: staging dates between 1 June 2015 and 1 April 2017.
- New employers set up between 1 April 2012 and 30 September 2017: staging dates between 1 May 2017 and 1 February 2018.
Several aspects of the staging regime mean the above dates can be varied in certain circumstances.
Stakeholder Pension Schemes
Before the new auto-enrolment duties came into effect, there was no requirement in law for a UK employer to contribute to a pension scheme in respect of its employees. But an employer with five or more employees was, until 1 October 2012, generally obliged to designate a stakeholder pension. The stakeholder requirements were intended to facilitate access to a pension scheme for employees. As a result, an employer had to provide certain information to employees about its designated stakeholder pension scheme, but was not obliged to pay contributions.
The statutory duty on an employer to designate a stakeholder pension scheme has now been repealed, due to the advent of auto-enrolment duties for employers. A key consequence is that a UK employer is no longer required to offer any sort of pension access until it has passed it’s auto-enrolment staging date. What impact that will have remains to be seen given the fact that if an employer already has employees who are members of the stakeholder scheme, that scheme must continue.
For more information please contact a member of the SAS Daniels Employment team on 0844 391 5866.
How will the new pension law affect your business?
Free Seminar from A & B Financial Options
Christian Pepper from A&B Financial Options will provide all the information you need to ensure you do not fall foul of this new legislation. SAS Daniels LLP will also talk about the practical legal implications that employers will face.
Date: Wednesday, 10 October 2012
Time: 09.00am – 10.30am followed by refreshments and networking
Venue: The Village Hotel, Cheadle, Cheshire SK8 1HW
Cost: Free to attend
To book your place, please email mailto:[email protected]