Theo Paphitis and Karen Brady are all over our tellies backing auto-enrolment in adverts informing workers that from 1st October 2012, employers will have to provide a pension scheme, and to encourage worker contributions aswell.
If this is the first you have heard about it, or you don’t feel at all ready yet – don’t panic!
Pensions auto-enrolment legislation is in force from today, but does not immediately apply to all businesses at the same time. From 1st October 2012 it will apply only to businesses with 120,000 or more workers on the payroll. The implementation is gradual, with legislation applicable for more businesses on a month by month basis until everyone is covered after February 2018.
The date when the new provision apply to a business will depend upon how many workers were on its PAYE scheme in April 2012, for example business with 5,000 workers on its payroll will need to begin enrolling workers on 1st May 2013 but a business with 100 workers will only need to comply as of 1st May 2014. When the legislation does apply, the business will be required to enrol all eligible job holders into a qualifying pensions scheme, with contributions being made by the worker and employer.
The level of contribution will gradually increase so that by October 2018 there will be a contribution of 8% of any qualifying earnings, 3% of which will be from the employer.
It is important to be aware of your responsibilities to start making plans as to how the additional cost will be absorbed. This may be a factor relevant to long term contracts, or provision may be sought to allow for costs to be passed up the chain.
Find out more at the next Lawspeed Seminar Knowledge is Power, or ring a Lawspeed consultant for bespoke advice on how the pension legislation could affect your business – we are on 01273 236 236 for all further assistance.