What Is Auto Enrolment?

What is Automatic Enrolment

Pension auto-enrolment is part of the UK Governments overall Workplace Pension Reform strategy. All UK employers will be affected and will have to take action by their “staging date”. This is determined by the business size as at April 2012 with large employers commencing from October 1st 2012 and all companies including smaller ones having to act by April 2017.

The new law requires all employers with one or more workers to automatically enrol certain members of their workforce into a “qualifying” workplace pension scheme into which they must also make contributions.

Employers must automatically enrol workers into a workplace pension scheme if they:

  • are aged between 22 and State Pension age
  • earn more than £9,440 a year
  • work in the UK

Employees will be able to “opt out” of the scheme and employers will need to facilitate this and then automatically re-enrol staff every three years.

Employers have the flexibility to use an existing pension arrangement (as long as it “qualifies”) or put in place a new scheme if this better suits their requirements. A new quasi Government scheme called NEST has also been introduced which every employer, regardless of size, is able to use should they wish.