Contact SGD Pensions Consulting now for more information:
Tel: 0844 870 9964
Email: info@sgdpensionsconsulting.co.uk
Employer Duties
As one of the most monumental employer pension reforms in British history, from October 2012 all employers will have a number of new legal duties and obligations placed upon them relating to employer pensions.
The new legal duties will require an employer to enrol all eligible employees into a pension scheme that meets certain criteria. The employer must automatically enrol all eligible employees into a qualifying scheme by either certifying their existing scheme as quallifying, if a scheme already exists or alternatively the employer must set up a new qualifying scheme like NEST.
National Employment Savings Trust (NEST) is the scheme which has been set up by The Nest Corporation in conjunction with the government. This will be the default scheme if an employer does not have an existing qualifying scheme or does not set up an alternative qualifying scheme. NEST a low cost no frills scheme is predominately aimed at lower earning employees aged between 22 years and the State Pension age earning over £7,475 gross a year.
Based on the new pensions reforms, the minimum contribution for NEST is 8% of banded earnings (required contribution levels will differ for alternative qualifying schemes), distributed between employee and employer contributions including tax relief. The employer contribution must always be at least 3% except during the phasing period (please see Staging & Phasing). Employees will have the right to opt-out of the scheme; however, employees will have to be automatically re-enrolled at a later date if they are still an eligible employee of the business.
The minimum contribution levels to qualify are outlined below:
Minimum total contribution: 8% of Band earnings £5,715 - £38,185
Employee contribution: 4%
Tax relief: 1%
Employer pays: 3%
| Employers MUST | Employers MUST NOT |
|---|---|
| Auto enroll and re-enroll eligible employees | Give joiners the opt-out form |
| Deduct payments | Discourage membership |
| Register/Re-register their scheme | Encourage opt-outs |
| Provide information to eligible and non-eligible jobholders | Use "prohibited recruitment conduct" |
| Provide information to scheme providers | Offer advice |
| Process opt-outs/make refunds | |
| Keep records |
Research has shown that employers could face significant additional costs to administer and comply with the new legislation post October 2012. It is strongly recommended that employers who have not yet reviewed their current situation and started planning for the implications of the new rules do so as a matter of ugency.
If you have any questions please conact us to speak to an adviser or alternatively use our call back service and one of our advisers will call you back to discuss your requirements. If you would like a copy of our New Penions Reform Guide then please complete your details to the right and download your free copy.
