From October 2012 the government is making sure that employees take a greater responsibility in their pension
arrangements by requiring employers to automatically enrol into pension schemes and to make a minimum level of
contributions. This will be phased in, larger employers first
The content of this newsletter is intended for general information purposes only. You should always seek appropriate professional advice before acting.
No responsibility is taken for any loss as a result of any action taken or refrained from in consequence of the contents of this newsletter.
How much will it cost me as an employer?
Employer (by PAYE scheme size) Staging Date
More than 2,000 employees Before August 2013
1,250 to 1,999 1 September 2013
800-1,249 1 October 2013
500-799 1 November 2013
350-499 1 January 2014
250-349 1 February 2014
160-249 1 April 2014
90-159 1 May 2014
62-89 1 July 2014
Between 1 August 2014 & April
Between 1 June 2015 & 1 April
Workers will be able to opt-out of their employer's scheme if
they choose not to participate. Workers who give notice
during the formal opt-out period will be put back in the
position they would have been in if they had not become
members in the first place, which may include a refund of any
contributions taken following automatic enrolment. Employers
are also able to stipulate up to three months period before
employees can join the scheme, so temporary and seasonal
staff may not need to be included
An eligible worker is an employee aged between 22 and
state pension age and earning above the income tax personal
allowance (£9,440 in 2012/13). Contributions will be payable
on earnings between £5,668 and £41,450.
Does everyone need to join?
From To Employer Total
October 2012 September 2016 1% 2%
October 2016 September 2017 2% 5%
October 2017 - 3% 8%
Employers should prepare themselves for these
changes. Consider which type of pension fund to make
available, stakeholder, occupations scheme, personal
scheme or government created NEST scheme.
They should decide upon pensions policies and
consider whether introducing salary sacrifice
arrangements for employee contributions to provide
National Insurance savings.
Where a worker is automatically enrolled there will
be a minimum contribution of 8% of qualifying
earnings, of which the employer must pay a
minimum of 3%. If the employer chooses to pay
the minimum 3%, the worker will pay 4%, with a
further 1% paid as tax relief by the
government. (Qualifying earnings is earnings
between £5,668 and £41,450).