So, what’s this Auto Enrolment all about?
It’s been three years since the introduction of a number of new employer duties that have helped people to save more money for retirement and allow staff to check pension provisions. Automatic enrolment or auto enrolment is an initiative designed by the government. The basic goal is to aid people to save for later life with the help of a pension scheme at work. This workplace pension scheme has not yet been introduced in every sector and it started with big businesses. It is good to know that employers have three options when it comes to pension schemes. They can design and practice their own pension scheme, use the assistance of expert pension provider and use auto enrolment scheme from the government.
Who will become part of this initiative automatically?
The new system automatically enrols all the workers in the United Kingdom who are over 22 years old and under the state regulated pension age and earn more than certain amount of money (somewhere above 8000 pounds).
People who are not part of adequate pension scheme will also be automatically enrolled. Even part-time workers will become part of this pension scheme, but only in case they earn more than 60% of the amount earned by regular employees. It is crucial to understand that people don’t have to be part of this scheme. There are cases when people need all the money they get in order to cover their expenses or they simply believe that using a private pension scheme will work for them. Employees get a letter related to the scheme when they start working in any place. They will get thorough information about the provider and other important information.
When will this process finish?
As we mentioned before, the auto enrolment started in October 2012 when large companies (120.000+ employees) were enrolled. In 2013, companies that had between 250 and 2000 had their staff enrolled in this scheme. Finally the companies with less than 250 employees integrated auto enrolment in 2014. However, the smaller companies, those with 30 or less employees and new businesses can implement the system until 2018.
How does auto enrolment affect employees?
In case you are part of a defined benefit pension scheme at your workplace, your employer must check whether the scheme complies with certain requirements. These requirements include valid contracting out certificate and getting the adequate benefit levels for a contracted out pension scheme. Those who are part of a defined contribution scheme will find the participation of their employer, the government and their own participation in the pension in the form of percentage of qualifying earnings.
Honey Bee Accounting
Carl Ford is the founder of Honey Bee Accountancy. Carl has extension knowledge of the retail and recruitment sectors which is utilised to help grow successful businesses for the clients of Honey Bee Accountancy.