This year is set to bring significant changes to the legislation regarding pension law, and this will mean legal obligations for employers that they need to be fully aware of if they are going to meet their requirements. The changes affect both employers and workers, but it is particularly important for those running a business to be aware of them because they will carry the larger share of responsibility in terms of implementing the new changes – known as the automatic enrolment pension plan – in both financial and administrative terms.
As is indicated by the name the auto enrolment pension plan involves eligible employees having part of their wages placed into the pension scheme set up by the Government (the National Employment Savings Trust) automatically, rather than deciding for themselves whether to put any of their money into a pension plan. It is designed to ensure that employees start saving for their retirement at an earlier stage thus reducing the burden on the state created by an ageing population. Employees still have the option of removing themselves from the scheme within a month of being enrolled for it.
Employers are expected to make sure that all employees who are eligible for the plan are enrolled, which means anyone who is aged between 22 and the present pension age, but also have some financial obligations to meet. They are expected to contribute no less than 3 percent of the total minimum amount of each employee’s qualifying earnings (8 percent) that has to go into the pension plan. If a business owner already operates their own private pension scheme for employees they can continue to use this rather than switching to the NEST, but all eligible employees must still be automatically enrolled onto it to meet the legal requirements.
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