Auto Enrolment Responsibilities
It is so important for all employers to make sure that they stick to the…
It is so important for all employers to make sure that they stick to the law with regards to their employees. This relates to many things and one that is starting to come into place is pension auto enrolment. Since 2012 the rules on auto enrolment have changes and it means that workers have to be put into a pension scheme by their employers. These auto enrolment responsibilities have to be carried out by 2018 unless the worker choosing to opt out.
There are other criteria for workers to qualify them for the scheme. They have to be aged between 22 and state pension age and earning over £10,000 a year. If they qualify and do not choose to opt out then the employer has to enrol them into a qualifying scheme and both the employer and employee have to pay in the minimum contributions. Workers that do not qualify that are either aged from 16-21 or between state pension age and 74 or earning between £5772 and £10,000 can opt-in to the scheme and the employee and employee will have to pay in at least the minimum contributions. Those earning less that £5,772 a year and aged between 16 and 74 can ask to join but there is no minimum contribution amount.
It is really important that any employers that have not yet joined the scheme, plan carefully for it. They will need to be aware of whether they have workers that qualify and how much will need to be paid in by them and the employees. It is possible to use an advisor to do this for you, to use software to help or you can sort it out for yourself. Advisors know the rules so they will help to avoid any possible fines that could be put on employers that do not comply with the new rules. There will be warnings, but if a company continues to not comply with the styles then there is a fixed penalty notice of £400 which can then increase up to £50,000 if it is not paid or scheme not put in place.
It may sound unfair but the scheme has been put in place to encourage more people to save for their retirements. This puts less pressure on the state to support retired people and helps people to be better off when they are retired. For employers, it will be an additional expense, but this is why it is taking six years to roll out the scheme. This should give ample time for the necessary planning of finances by the company as well as time to understand the rules.
