Business News

Businesses Urged To Prepare For Pensions Shake-Up

The government has set out plans for automatic enrolment into workplace pensions.

The announcement followed publication of Making Automatic Enrolment Work, an independent review for the
Department of Work and Pensions, at the end of October.

The measures are due to start taking effect from April 2012 and all employers will be required to automatically enroll eligible jobholders into a qualifying pension scheme.

There will be a phased introduction, with the smallest employers – those with 50 or fewer employees –coming on board between summer 2014 and early 2016.

Employers will receive reminders of their new responsibilities12 months and three months before they are due to be affected.

Where the employer chooses to provide a money purchase arrangement, the minimum contribution requirements will be phased in to help both employers and individuals adjust to the additional costs gradually.

A new workplace pension scheme called NEST (National Employment Savings Trust). NEST will be one of the qualifying schemes and will be open to any employer who wants to use it to meet their duties.

The move to include all employers has attracted some criticism for placing an additional burden on smaller firms. The Federation of Small Businesses says that average small firm – those with four employees earning an average salary of £25,000 – will pay at least an extra £2,550 per year in administration and pension costs.

LINK: Workplace pension reforms

LINK: NEST website