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What you need to know about pensions

  • Blog
  • 03 December 2015

Under The Pensions Act 2008, October 2012 saw the auto-enrolment system come into effect. Starting with larger organisations, it will become compulsory for all employers to offer the auto-enrolment pension scheme by 2017. Auto-enrolment, designed to provide as many people as possible with access to company pensions, requires that employers automatically enrol employees into workplace pension schemes if:

  • They work in the UK and are between 22 and the state pension age.
  • They earn a minimum annual salary (this changes each year).
  • They are not already paying into a pension scheme.

What you need to know about pensions

It is essential that employers understand what is required of them and by when. Each employer will be given a 'staging date', when their auto-enrolment duties will commence. Here at the Federation of Small Businesses (FSB) we are able to offer support and business pension advice to small businesses, including all aspects of auto-enrolment. The staging date will be April 2017 for those employers who do not use the PAYE system. In some circumstances it may be possible to postpone your staging date.

Employees have the choice to opt out of the auto-enrolment scheme. However, as employers, you must review this decision with your employee every three years when an automatic re-enrolment is required. The regulator must be provided with certain information with regard to both auto-enrolment and auto re-enrolment and, where possible, employees should be kept informed at all stages.

As an employer you are legally required to comply with auto-enrolment duties. If you fail to do so you may be subject to enforcement action, such as a penalty.

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