Auto-Enrolment in Pension Schemes (March 2009)
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Millions to be Auto-Enrolled in Pension Schemes

From 2012 all UK employers will be required by law to provide a private sector qualifying workplace pension scheme for their eligible employees. It is anticipated that millions of employees will become eligible for pensions on “day one”.

Employees are to be automatically enrolled into either a qualifying pension scheme or a personal account for which there will be no waiting period (although qualifying pension schemes can have a waiting period of up to three months).

If employees do not want to become members of a pension scheme, they can choose to opt out but if they stay in the employer has to contribute 3% of band earnings. Those who opt out will probably be put forward automatically for re-enrolment after three years, when they will again have the chance to opt out.

Who will undertake the auto-enrolment?

It is important to note that the responsibility for auto-enrolment of employees falls to employers, not the Government or the insurance companies who will be running the auto-enrolment process. Auto-enrolment will affect all companies, no matter what size, and even those companies who still have final salary schemes may find they have some eligible employees.

Who will be eligible?

All employees are eligible for auto-enrolment, according to the Department of Welfare’s most recent Draft Regulations, unless they are:

  • already members of a qualifying workplace pension scheme* , or
  • are under the age of 22, or
  • earn less than £5,035 a year (as at 2009)

*A ‘qualifying’ workplace pension scheme will be one into which a company pays at least 3% of a band of earnings each year and that receives a minimum contribution of at least 8% in total contributions each year. 2012 may seem a fair distance away but personal accounts and auto-enrolment will have a huge impact on company costs and cash flow – it is important to start preparing now.

Contact Cartlidge Morland for more information and details of how we can help.

Cartlidge Morland is an independent employee benefits consultancy. We provide benefit services to a wide range of partnerships, family companies, PLCs, charities and governmental organisations. We also provide financial advice to private clients, investment management and mortgage broking services.

    Phone us on 020 7709 5560 or complete the online contact form