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The New Workplace Pension Regulations

1. Introduction

The new regulations will be enforced by the Pensions Regulator, and the statutory information that is included in this paper, and the papers that will follow on, have been sourced from The Pensions Regulator website.

2. When will the new scheme start?

This is known as the ‘staging date’. This will be phased in over a number of years starting in October 2012. All employers will be required to comply by February 2016, with the earlier dates applying to larger employers. It is anticipated that more information will be made available from 1 April 2012.  The allocated staging date will be based on the size of the employer’s PAYE scheme on 1 April 2012.For Employer’s with fewer than 50 people in their PAYE scheme the starting date will be staged between August 2014 and February 2016.

You can choose to bring forward your staging date (earliest possible date is 1 October 2012) but you must inform The Pension regulator of your intention to do so and be able to demonstrate your ability to discharge the new duties. Therefore, it would appear that we will have a period of time to plan and modify our current systems to comply with the new rules.

3. What is meant by ‘automatic enrolment’

This means that an employee must be admitted to membership of a ‘qualifying scheme’ automatically, without the need to complete any forms or obtain anyone’s permission. This must happen no later than three months after becoming an ‘eligible job holder’. Under the new rules, employees must be included in the pension scheme unless they opt out.

4. Which of our employees will need to be included?

The requirement to be automatically enrolled into a Qualifying Scheme will apply to all ‘Eligible jobholders’ in the UK aged between 22 and the State Pension Age, providing that they earn above a minimum income threshold expected to be in line with the income tax threshold (£7,475 for 2011/2012). Those outside these age limits or on lower earnings will be able to opt in.

Therefore you could have staff in the following categories:

1)      Aged between 22 to State Pension Age, earning over £7,475 a year. You must automatically enrol these staff into a pension scheme.

2)      Aged between 22 to State Pension Age earning over £5,035 up to £7,475 a year. You must provide information to these staff about their right to ‘opt in’ to a pension scheme.

3)      Aged from State Pension Age to 74, earning over £7,475 a year. of staff in this You must provide information to this staff member about their right to ‘opt in’ to a pension scheme.

5. What level of contribution must be paid?

The contribution levels will be phased in over a period of time.

The Contributions are paid on a ’Band of Earnings’ (for 2010/11 expected to be between £5,715 and £38,185).  These figures will be indexed up each year. The earnings will include overtime, commissions and bonus payments etc. The employer’s contribution, within the 8% total, must be at least 3% of the Band Earnings and the employee makes up the difference (with tax relief included).

For more information on how these regulations will affect your business please contact us and speak to Mark Hook on 0116 2827000.