Many, if not all, employers will be aware that important changes to the laws concerning workplace pension legislation are due to be rolled out across the UK starting this year. However they may not be fully aware of the implications of these changes both for their businesses and their employees, and also of what their new obligations will be once they are in place. Therefore, this is a look at what the changes actually are and what they will involve for business owners and their workforces.
The automatic enrolment pension plan
This is at the centre of the changes which are being brought in from this year, and it represents a significant departure from the way in which pension contributions are currently handled within the workplace. At the moment employees have the choice of paying part of their wages into a pension plan or not, and aside from managing these plans, employers have no financial responsibility.
Under the automatic enrolment pension plan all of those employees who are eligible – which is anyone aged between 22 and the pension age – will have part of their wages placed into the scheme set up by the government for this purpose, and will have to make the decision to opt out themselves. Furthermore, employers will be required to contribute a minimum of 3 per cent of the 8 per cent minimum qualified earnings amount that must be put in for each employee.
The National Employment Savings Trust (NEST)
The NEST is the scheme set up by the government that employees will be automatically enrolled for, but if employers already have a private pension scheme like NOW: Pensions Auto Enrolment scheme they can continue to use this as long as it meets the requirements under the changes. Even if you are using your own pension fund those employees meeting the eligibility criteria must still be automatically enrolled for it, and employers are forbidden by law to discourage employees from participating in the scheme.