subject: Pensions: The New Auto-enrolment Rules And What They Mean For Workers [print this page] Under current group pension rules, all UK employers that offer a pension scheme do so on an 'opt in' basis, meaning that workers must pro-actively decide to join the scheme and apply to do so. This article looks at why some workers do not currently belong to their employer's pension scheme and how the new 'Auto Enrolment' rules being phased in from October 2012 will affect workers.
Many employees, for many different reasons, currently miss out on the valuable benefits of a pension scheme because they have failed to take steps to join the scheme being offered to them by their employer. This could be because of lack of knowledge or appreciation about the scheme, a fear of losing out financially because of having to contribute to the pension scheme, a lack of understanding of the scheme or simply because joining their employers pension scheme remains on their list of 'things to do'.
However, things are set to change for workers (and, indeed, employers) between October 2012 and September 2016 (date determined by employer size and PAYE scheme information) when all workers who are eligible to join their employer's pension scheme will automatically be enrolled into the scheme. This effectively means that, instead of opting into the company pension scheme, workers will need to opt out of the scheme if they do not wish, for any reason, to be part of the scheme.
If a worker is already a member of their employer's pension scheme, the employer will have to make sure, from when the changes are brought in, that they are paying the minimum contribution required under the new rules. Workers that were not previously part of the pension scheme will be automatically enrolled under the auto enrolment rules and will have to opt out if they do not wish to be part of the scheme. If the worker opts out, they will automatically be re-enrolled every 3 years.
An 'eligible worker' is someone who is between the age of 22 and the state retirement age and earns above the income tax allowance. They will be required to pay contributions on earnings between 5035 and 33,540. The amount of the contributions will be phased in, and from October 2017 will be 8% (minimum 3% from the employer and the minimum difference to be made up by the employee).
Employers will have the right to choose the particular pension scheme they adopt.
The duties to comply with the new regulations lies with your employer, so they will inform you of, and discuss with you, all of the changes as the date for implementation of the new rules approaches.
