By Patrick Heath-Lay, Director of Finance, B&CE
Currently, the government estimates that over seven million workers are not saving enough for retirement. To counter this from October 2012 auto-enrolment will come into effect, requiring every single employer (employing at least one employee) to automatically enrol qualifying employees into a suitable workplace pension and pay contributions on their behalf.
The introduction of these new employer duties means that there is a distinct need to take action. Auto-enrolment is being implemented over a 4-year period, known as staging, with the largest companies being the first to comply from 1 October 2012. Putting a strategy and a workplace pension partner in place now will help employers to decide how best to implement the changes and have a real understanding of the financial and administrative impacts on their business.
What does auto-enrolment mean to your business?
Auto-enrolment will apply to all employees aged between 22 and State Pension Age (SPA) and earning over the income tax personal allowance (£7,475 in 2011/12), regardless of employer size.
The requirements are detailed and complex but essentially employers will need to:
- Identify eligible workers and enrol them automatically
- Pay a minimum of 1% of band earnings (band earnings are between £5,715 and £38,185 – 2010/11) from their staging date, rising to 3% of each employee’s band earnings into a qualifying workplace pension scheme from 2017
- Communicate the opt out procedure to all employees and process any resulting refund of contributions correctly
- Keep records for 6 years, including opt out and opt in details and levels of contributions made.
- Employees who have opted out will need to be automatically re-enrolled every 3 years.
What you should expect from an experienced auto-enrolment partner
Finding the right partner in a field you may know little about can be a daunting prospect but the good news is that B&CE can support you through the auto-enrolment process. As a provider of a semi-auto-enrolment solution for the past 10 years, B&CE has gained extensive insight from its experience and built this into its solution. The People’s Pension is therefore based on three core principles:
Employer Assistance – an online management program designed to assist employers in meeting their regulatory obligations, with call centres and dedicated account managers and support material.
Employee Engagement – a suite of auto-enrolment educational materials for employees, helping the employer communicate these complex changes, as well as online account access for individuals.
Design Simplicity – a Super Trust; with the interests of members at its heart, a multi-employer scheme provided on a not-for-profit basis. Offering three risk-based investment profiles or a Self-Select option from seven investment funds. The People’s Pension has a clear and transparent annual management charge of 0.5% without fees on transfers, without additional charges for employers and without commission paid to third parties.
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