What’s Auto enrolment?
It’s a scheme introduced by the government, which creates automatic pension benefits for the employed. It’s a compulsory scheme for employers to automatically enrol their eligible workers into a pension where the employer pays into the scheme.
It is being phased in starting with the largest employers first and gradually rolling out to all employers by October 2018.
Why is it happening?
The government has recognised that many people don’t save enough money for their retirement and the State Pension may not provide enough money for people to live comfortably. Also, people are living longer and that puts a strain on the State benefits system so having a private pension is becoming increasingly important.
Who does it apply to?
Not all workers are eligible for automatic enrolment and others such as the self-employed, do not qualify. Provision has been made to allow those who fall outside of automatic enrolment to also join pension schemes and start building retirement benefits.
How will it happen?
Automatic enrolment has been designed so that eligible workers who want to build up retirement savings don’t have to take any action themselves – employers will automatically enrol eligible workers into a workplace pension scheme and deduct any contributions that the member is required to pay from their wages or salary, and then pay into the pension scheme on their behalf.
How can we help you as an employer?
Fortune Chartered Accountants can help your payroll team navigate through the 32 steps of the auto Enrolment process.
- Automatic enrolment makes it compulsory for employers to offer eligible workers a workplace pension
- The employer must automatically enrol every eligible worker into the scheme
- The employer must make a minimum contribution to the scheme
- You will receive tax relief on your contributions - but you’re free to leave the scheme at any time
- The earlier you start saving into a pension, the better it is
- Employer contributions and tax relief make pensions an attractive option for saving for your retirement
To read more see the pensions advisory web site here.
The information for this page was sourced from the Pensions Advisory Service website.