
In October, employers’ pensions obligations are radically changing. For the first time, employers will be legally required to automatically enrol workers into a suitable pension plan and make contributions to them. But are you aware what this means for your business?
When?
From October 2012 employers of all sizes will have to automatically enrol into a pensions plan ‘workers’ who are aged between 22 and state pension age, earn over £8,105 per year and work in the UK. These workers are known as ‘eligible jobholders’ and employers must pay minimum contributions to a pension plan on their behalf. The duty will come into force in October for the largest employers and is expected to be phased in for smaller employers over a period ending in February 2018.The gist of it
Exceptions
Employee rights
Once an employee has been automatically enrolled into a pension plan he can choose to opt-out. If he/she opts-out within a month, their contributions are returned. Employers will need to keep careful records of opt-outs. Approximately every three years opters-out will have to be automatically re-enrolled (although they can opt-out again). Employers can choose to postpone the auto-enrolment of an employee for up to three months, provided the appropriate notice is given. The pensions regulator will police compliance with automatic enrolment duties and can issue substantial penalty notices to employers. It’s imperative that businesses take action. Failure to comply could also amount to a criminal offence.Charmian Johnson is a partner in the pensions practice at Squire Sanders.
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