Pensions Reform – Auto Enrolment

From October 2012 new legislation will come into force which will require all employers to auto enrol eligible workers into a qualifying workplace pension scheme and make contributions to that scheme.

Implementation will be introduced gradually between October 2012 and October 2016 based on the size of employer.

There will be a three month waiting time before employers have to opt employees in during which time the employee can decide to opt in if they want to.

Once enrolled employees will have the option to opt-out, and receive a refund of any contributions deducted, but will re-enrol every three years.

For employers the new legislation means that they will have to audit their current pension provision to ensure that they have qualifying schemes and establish eligible jobholders who must be auto- enrolled. Eligible job holders are aged between 22 and state pension age and are paid above the income tax personal allowance (2012/13 tax year £8,105).

If employers do not already have a qualifying scheme they can choose the National Employment Savings Trust (NEST) which has been set up specifically for the introduction of the new legislation.