Pension Auto Enrolment
You must automatically enrol certain members
of your workforce into a pension scheme and as an employer, you
will need to make a contribution towards it. The law will come
into force for large employers from 2012.
Even if you already
offer pension arrangements for your workers, you will still have
some new obligations to meet.
Workers known as
‘eligible jobholders’ will need to be automatically enrolled
into a pension scheme that meets a number of conditions based on
the level of contributions paid or the benefits that they
receive. Eligible jobholders may choose to ‘opt out’ of the
scheme, but only after they have been automatically enrolled by
You will also have a
requirement to tell any other workers you may have that they can
opt in to the pension scheme, and to tell all your workers what
kind of scheme you have chosen.
Workers you will need to
automatically enrol are known as ‘eligible jobholders’. These
are workers who:
1. Earn more
than the minimum earnings threshold and
2. Are aged
between 22 and state pension age and
3. Work in
Why are the changes
People are living longer
and are likely to enjoy a longer retirement. But many people are
not saving for their retirement at all, and many who are saving
aren’t saving enough.
These changes will give
many more people the chance to save for when they retire. The
main benefits for your workers are that you pay a contribution
and that it is an easy way for them to save.
When do the changes come
Each employer will be
given a date from which the changes will have to be in place.
This is known as your staging date.
• The first
staging dates will be in October 2012.
staging date will be broadly based on the number of people you
have in your PAYE scheme.
with the largest number of workers will have the earliest
The Pension Regulator
will contact you 12 and 3 months before your staging date.
What will I have to do?
You will have to
automatically enrol your eligible jobholders into a qualifying
pension scheme and make an employer contribution towards it.
The main things you must
• Provide a
qualifying scheme for your workers.
Automatically enrol all eligible jobholders into the scheme.
employer contributions for eligible jobholders to the scheme.
• Tell all
eligible jobholders that they have been automatically enrolled
and they have the right to opt out if they want to do so
with ‘The Pension Regulator’ and give them details of your
qualifying scheme and the number of people that you have
You must not:
your workers to opt out of the qualifying pension scheme.
recruitment practices that will benefit job applicants who
indicate they are prepared to opt out.
• Treat a
worker unfairly or put them at a disadvantage because of
will I have to make?
You must contribute at
least 3% of your worker’s earnings (there is a phasing in of
contributions with a minimum employer contribution of 3%
expected on full implementation in 2018), although you can
choose to pay more if you wish. The worker will be responsible
for paying the rest. They will get tax relief on their
contribution and the total combined contribution will be a
minimum of 8%.
Contributions will be
based on a band of ‘qualifying’ gross annual earnings. When
working out your contribution, you do not need to consider any
amount your worker earns above the upper earnings threshold.