As an employer, you’re now legally required to provide a pension scheme for your employees – and auto enrolment is the process by which this happens.
But why were changes to workplace needed?
We’re all living longer, but UK workers are not planning ahead to support themselves financially once they’re retired. With the state pension now so small, forecasts were showing we’d have a generation of pensioners with no income and no means to live – putting a drain on the State.
Compulsory workplace pensions and auto enrolment are the solution to this problem.
Every UK worker will now have a pensions scheme, and their employer (you) will make deductions from salaries to pay contributions into this scheme – as well as adding your own employer’s contribution percentage too, depending on your reward choices.
Setting up a workplace pensions
As a business with employees, you’re now required to set up a workplace pension (even if you only have one employee) and automatically enrol all your eligible people. To be an eligible employee they must:
- Be over 22 but under State Pension Age
- Earn more than £10,000 per year (2016/17)
- Work in the UK
If any of your workforce meet these criteria, you have to automatically enrol them in a pension scheme, pay their contributions for them via your payroll and keep records on all this activity.
You’ll also need to source a pension provider that can supply a suitable auto enrolment-ready pension scheme for your employees.
If you need helping preparing for auto enrolment, give us a call on 01454 300 999, or drop an email to email@example.com