1. An introductionto workplacepension changesThere are new duties on employers, tohelp more people save for their retirement.All employers will need to act to complywith the law. This leaflet provides anintroduction to the new employer duties.What are the changes?You must automatically enrol certain Workplace pension schememembers of your workforce into a An arrangement you make to provide your workerspension scheme and as an employer, with an income for when they retire.you will need to make a contribution Workertowards it. The law will come into A ‘worker’ is a wider category than just employeesforce for large employers from 2012 and can include some contractors or agency workers.and smaller employers will follow. As a general rule, if you have to pay the national minimum wage to someone, or they are workingEven if you already offer pension arrangements for under an apprenticeship, they are a worker.your workers, you will still have some new obligationsto meet. Eligible jobholdersWorkers known as ‘eligible jobholders’ will need to Workers you will need to automatically enrol arebe automatically enrolled into a pension scheme that known as ‘eligible jobholders’. These are workers who:meets a number of conditions based on the level of • earn more than the minimum earnings threshold;contributions paid or the benefits that they receive.Eligible jobholders may choose to ‘opt out’ of the • are aged between 22 and state pension age; andscheme, but only after they have been automaticallyenrolled by you. • work in the UK.You will also have a requirement to tell any otherworkers you may have that they can opt in to thepensions scheme, and to tell all your workers whatkind of scheme you have chosen.April 2011
2. An introduction to workplace pension changesWhy are the changes What will Ibeing introduced? have to do?People are living longer and are likely You will have to automatically enrolto enjoy a longer retirement. But your eligible jobholders into amany people are not saving for their qualifying pension scheme and makeretirement at all, and many who are an employer contribution towards it.saving aren’t saving enough. The main things you must do are:These changes will give many more people the • provide a qualifying scheme for your workerschance to save for when they retire. The main benefitsfor your workers are that you pay a contribution and • automatically enrol all eligible jobholdersthat it is an easy way for them to save. into the scheme • pay employer contributions for eligibleWhen do the changes jobholders to the schemecome into effect? • tell all eligible jobholders that – they have been automatically enrolled andEach employer will be given a date – they have the right to opt out if they want to do sofrom which the changes will have tobe in place. This is known as your • register with us and give us details of your qualifying scheme and the number of peoplestaging date. that you have automatically enrolled.• The first staging dates will be in October 2012 You must not: and will continue through to 2016. • encourage your workers to opt out of• Your staging date will be broadly based on the the qualifying pension scheme number of people you have in your PAYE scheme. • have recruitment practices that will benefit• Employers with the largest number of workers job applicants who indicate they are prepared will have the earliest staging dates. Employers to opt out or with fewer workers will have later staging dates • treat a worker unfairly or put them at a from 2014. disadvantage because of automatic enrolment.• We will contact you 6 to 12 months before your staging date.You can find out what your staging date is likely to beby visiting our website at: www.tpr.gov.uk/staging
3. An introduction to workplace pension changesWhat contributions How will I knowwill I have to make? if my scheme is aYou must contribute at least 3% of qualifying scheme?your worker’s earnings, although Many occupational and groupyou can choose to pay more if you personal pension schemes will qualify.wish. The worker will be responsiblefor paying the rest. They will get tax To be a qualifying scheme, minimum contributions must be made, or it must provide a minimum raterelief on their contribution and the at which benefits will build up. Even if it doesn’ttotal combined contribution will be a qualify at the moment, you may be able to changeminimum of 8%. the scheme rules or amend the terms of the policy so that you will be able to use it by the time your stagingThere are different rules for defined benefit schemes, date comes around.including final salary schemes. More details will beavailable on our website later in the year. You may want to speak to a professional adviser about whether your scheme will qualify. You can findContributions will be based on a band of gross out more about what a qualifying scheme is on ourannual earnings. When working out your contribution, website at: www.tpr.gov.uk/qualifyingschemeyou do not need to consider any amount your workerearns above the upper earnings threshold. You can also sign up to our news-by-email service for regular updates at: www.tpr.gov.uk/newsWhat if I have anexisting pensionscheme?Even if you already provide a pensionscheme for your workers, you will needto check if it is a qualifying scheme.The requirements a qualifying scheme needs to meetdepend on the type of scheme you have.You should review your existing scheme and discussthe rules and any possible changes with your trusteesor pension provider.