January 07, 2011
The Pensions Act 2008 states that all businesses must start automatically enrolling eligible staff into a qualifying pension scheme between 2012 and 2016, unless individual workers decide to opt out of such a scheme. By 2017, the minimum percentages to be paid into the scheme must be 4% by workers, 3% by employers and 1% by the Government.
A survey by the Association of Consulting Actuaries has found that two thirds of small businesses employing less than 250 people do not have a company pension scheme.
Under the Regulations, employers can enrol staff into their own pension schemes or into the National Employment Savings Trust scheme which will be set up by the Government as a low-cost, trust-based, defined contribution occupational pension scheme for low paid workers.
Those employers that operate their own schemes must register them with The Pensions Regulator. As well as the minimum percentage contributions, the Act contains other requirements that company pension schemes must fulfill in order to qualify as acceptable, as well as information and administrative obligations on the part of the employer.
Employers who are not certain of their requirements under the Pensions Act 2008 or as to whether their existing pension schemes meet the requirements of the Act, should seek legal advice well in advance of the 2012 commencement date.
