In October 2012, the Government began implementing workplace pension reforms that imposed new duties on employers to make mandatory pension provision for their employees.
At the core of these reforms was a new requirement for employers to automatically include certain employees (called 'eligible jobholders') into a qualifying pension scheme.
These changes meant that, between October 2012 and February 2018, all employers – from the multinationals down to a firm that employs just a single staff member – must enrol all eligible jobholders into a pension scheme as a matter of course.
Eligible jobholders for auto-enrolment must have gross earnings that are at least equal to the 'earnings trigger' (£10,000 in 2015/16), although lower earners will also be able to join if they choose to opt in.
By 2018, employers will be required to pay pension contributions of at least 3% of each worker’s eligible earnings. The employee’s own contributions and tax relief will be added to this to meet a minimum 8% contribution rate. These changes will result in increased costs for businesses and will have the most significant impact on those employers who currently have limited or no staff pension provision. Therefore, if they haven’t already done so, it is essential that employers consider in advance their ability to meet these costs – non-compliance could result in fines of up to £10,000 per day!
As independent advisers with extensive experience in the pensions industry, Carpenter Rees understands the challenges that businesses will face.
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