20 December 2011 - Pensions reform in the workplace is crucial to ensure that increased life expectancy and the costs of retirement don’t lead to old-age poverty. The UK Government has made it clear that people should take responsibility for their retirement and start saving as early as possible. That is why automatic enrolment in a pension scheme will be introduced from October 2012.
This means that there is less than a year until the first large employers will have to start automatically enrolling staff into a pension scheme. Preparations continue apace in the pensions industry and, among employers, workplace pension reform is moving from a theoretical issue to a tangible operational task.
Once the reforms are in place, employers must automatically enrol eligible employees into a qualifying workplace pension scheme. Any employees that don’t want to save for their retirement in that pension scheme will need to make an active choice to opt out. This is a crucial change from the way things stand today where employees often have to go out of their way to commence retirement savings.
The Government has created the National Employment Savings Trust (NEST) which is designed with the needs of low to medium earners in mind and is one of the a number of new or existing pension schemes that employers can choose to fulfil their new duties.
Employers need to understand when automatic enrolment will affect them. The requirements are staged over time, with the largest corporations starting from October 2012. The Pensions Regulator’s website has information on the ‘staging’ of automatic enrolment. Employers with more than 3,000 staff can check now when their staging date will fall. Employers with 50-2,999 employees will have their staging date after August 2013 and more information for these employers will be available soon from the DWP.
Further information for employers click here
