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Under provisions contained in the Pensions
Act 2008 employee pension enrolment and
employer contributions are to be made
compulsory.
These provisions, which are due to come
into force in 2012, cover the automatic
enrolment of qualifying workers into a
qualifying workplace pension scheme and a
duty on employers to make contributions to
such a scheme. To ensure that employers
are able to comply with these duties a
universal personal account scheme is being
created.
The main details of the scheme are:
- automatic enrolment of eligible
employees aged between 22 and state
pension age earning over £5,035 per
annum (unless employee opts out)
- employer contributions of 3% on a
band earnings, initially set as £5,035
-£33,540
- employee contributions of 4%, with
an additional 1% funded by the
government in the form of tax relief
- both employer and employee
contribution levels will be phased in
over three years
- an enforcement regime led by the
Pensions Regulator, with powers to
penalise employers who do not comply
with the regime.
Consultations and regulations will be
issued in the lead up to the introduction
of the legislation. These should make it
clearer what is expected of employers and
pension schemes in anticipation of the new
regime starting in April 2012.
The Personal Accounts Delivery
Authority (PADA) has recently launched a
“myth busting” campaign in advance of the
rules taking effect in 2012.
Internet links:
Pensions Reform
PADA myth buster |
