The law now obliges every workplace to offer a workplace pension scheme and to make contributions to the pension plans of employees who are paying into the scheme. This is called Auto Enrolment, and it will apply to all employers by 2018.
Under the Pensions Act 2008, workplace pensions have become ‘opt-out’ rather than ‘opt-in’, which means most employees are automatically enrolled into a pension provided by their employer. The law also requires employers to pay into their employees’ pension schemes.
WHO DOES THE WORKPLACE PENSION LAW APPLY TO?
Generally, if you’re a UK-based employee aged between 22 and State Pension age and you earn at least £10,000 per year, you will be automatically enrolled into your workplace pension scheme.
HOW MUCH DO EMPLOYERS AND EMPLOYEES NEED TO CONTRIBUTE?
Currently, the minimum employee contribution into an Auto Enrolment pension scheme is 3% of your annual ‘qualifying earnings’, which includes tax relief of 0.6%. The law also requires your employer to pay at least 2%. The plan is for these minimum contribution levels to increase, so that by April 2019 you and your employer will be making combined pension contributions worth at least 8% of your annual salary. That’s 5% employee contributions and 3% employer contributions.
EMPLOYERS’ WORKPLACE PENSION OBLIGATIONS
Every worker who meets the eligibility criteria will be enrolled in a workplace pension. By law your employer must tell you if you will be enrolled in a workplace pension.
Your employer must write and tell you if you’re being enrolled in a workplace pension or not. When you’ll be enrolled depends on the size of the organisation you work for. Large employers started first to enrol their employees. Your employer will give you the exact date nearer the time.
If you’re being automatically enrolled, your employer must tell you in writing:
- the date of your enrolment the pension scheme you will be enrolled in
- how much will go into your pension (as a proportion of your salary or as an amount)
- how you can opt out of the pension
If you want to Your employer must also:
- accept your request to join their workplace pension, if you have previously opted out or stopped paying – your employer must accept your request once in a 12 month period but can choose to accept further requests if they want to
- enrol you back into the pension at regular intervals (usually every three years), if you meet the eligibility criteria and aren’t in a workplace pension
- pay your full contributions on time, to the pension scheme provider
HOW WE CAN HELP
Our specialist team can provide expert legal advice in respect of:
- employer reorganisations
- public or private sector transfers and outsourcing
- protection of accrued pension rights
- career breaks
- the scope of transitional arrangements
- and more