Pension auto-enrolment deadline looms for mid-size businesses

10th September 2014

The deadline for the next stage of the government’s pension auto-enrolment means that contributory pensions for most employees are on their way.

The new laws on workplace pensions that came into force on 30 June 2012 are gradually being rolled out, requiring employers to enrol eligible workers into a pension scheme and make a minimum pension contribution.

Many larger employers who employ more than 250 people will already have been required to begin enrolling their employees. However, an increasing number of employees will be enrolled over the next 18 months; as employers with 50 to 249 employees will be required to enrol by April 2015 and those employing less than 50, between 1st June 2015 and 1st April 2017.

Employers will be notified by their tax office of their “staging date” by which they are required to enrol their employees and eventually will be required to make a minimum employer contribution of up to three per cent of earnings.

Most workers will be eligible to enrol provided they:

  • ordinarily work in the UK;
  • are aged between 16 and 75; and
  • work under a contract of employment or any other contract, whether or not there is a written contract.

 However, not all job holders will have to be auto-enrolled in a pension scheme. To be eligible for auto-enrolment, a job holder must be aged at least 22 but below state pension age. This is currently age 65 for men and age 60 for women, though it is being incrementally equalised between the sexes.

The worker must also earn more than the earnings trigger in a relevant pay reference period (which is the same period used to assess qualifying earnings). The trigger has been set at £10,000 a year in the 2014/15 tax year. Earnings include bonuses, overtime and statutory maternity, paternity or adoption pay.

Employers are required to provide specific information in writing to the employee, including their auto enrolment date, details of the scheme and the contributions required. Failure to follow the correct procedure or comply with the rules could see employers faced with enforcement action, notices and a penalty.

Ansons’ employment law experts advise both employers and employees about their obligations under the pension auto enrolment scheme to ensure they comply with the new requirements.

For further information on workplace pensions or any other employment law problem contact Martin de Ridder in the Ansons Solicitors’ employment law team, on 01543 431186 or email Ansons Solicitors has offices in Cannock and Lichfield, Staffordshire.