There is now legislation in place which gives employees the right to be part of an employer pension scheme. Any business with employees will be affected by this legislation to a greater or lesser effect, depending on the type of its employees and the level of their salaries.

 

There is just one category of business which will not be affected. Limited Companies with directors but no other staff will not be affected by the legislation, provided the directors do not have contracts of employment with the company.

 

Other employers will be affected as follows

Employers with staff earning over £10,000.00 per annum.

 

Such employers will already have a PAYE scheme in operation. They will be required by law to provide a pension scheme for their staff by a certain date. The date varies depending on the date the PAYE scheme was originally opened and the numbers in the PAYE reference.

 

It is possible for anyone or any business with A PAYE scheme to find out the staging date by entering the PAYE reference in the box on the website below :-

 

http://www.thepensionsregulator.gov.uk/employers/staging-date.aspx

Selecting a Scheme

A provider, a specialist pension company to run the scheme, will need to be selected. The government has set up a pension scheme called the National Employment Savings Trust (NEST), which any employers could use. Alternatively another pension provider can be used. We are not authorised to give advice on which provider should be selected but can, if you wish, put you in touch with an independent financial adviser. Please note that advisers fees are increasing as it gets closer to staging dates.

Selecting a Scheme on line

Alternatively, there is a site you can use :- https://www.pensionplaypen.com. The site has a fee of £500.00 plus VAT, which includes usage of the site's questionnaire to help you select which pension provider is best for you and connecting you to your chosen provider.

 

Using the following code when visiting the above site will entitle you to a slight discount:- AHacc03

 

If you do not have a computer available you could arrange to call in to our offices and use our computer facilities. Please note that we are not authorised to give financial advice and therefore the decision regarding which provider to choose must be made by you.

 

All eligible jobholders must initially be enrolled into the scheme. Eligible jobholders are staff between the ages of 22 and state pension age who earn over £10,000.00 per annum and who work or ordinarily work in the UK. Such people must then be informed that they have been automatically enrolled and have the right to opt out.

 

It is illegal for an employer to encourage or force staff to opt out of the scheme.

 

Any employees who opt out must be given the opportunity to rejoin the scheme once a year. Such staff must be enrolled back in every 3 years and must then opt out again if they wish to do so.

 

There are rules for minimum contributions which will affect both employer and employee which are as follows

 

From

To

Employers Minimum Contribution*

Total Minimum

Contribution*

Staging Date

30/09/2017

1%

2%

01/10/2017

30/09/2018

2%

5%

01/10/2018

 

3%

8%

* As a percentage of gross salary

 

This would mean that, for example, from 01/10/18 if the employer pays 3% the employee would have to pay 5% to make the 8% total.

Staff Earning Between £5,824.00 and £10,000.00 per Annum (and staff between 16 and 21 or between the pension age and 75 earning over £10,000.00 per annum)

Such staff have a right to opt into a pension scheme and, if they chose to opt in the employer must contribute to their pension at the minimum rates given above.

 

Such staff must be informed of their right to opt in to the scheme.

 

If the employer does not have any staff earning over £10,000.00 they are not required to have a scheme set up in all circumstances (as with the employers described above), however if staff wish to opt in to a pension scheme the employer must set one up to accommodate such staff.

Staff Earning Below £5,824.00

Such staff have a right to join a pension scheme but the employer is not obligated to make any contributions to the scheme.

 

Such staff must be informed of their right join a scheme.

 

If the employer does not have any staff earning over £5,824.00 they are not required to have a scheme set up in all circumstances (as with the employers described above), however if staff wish to opt in to a pension scheme the employer must set one up to accommodate such staff.

All Employers

Any business with any staff (excluding companies with directors only) must notify the pensions regulator within 5 months of their staging date, even if they have no staff earning over £10,000.00 and no staff wishing to join a pension scheme. The default staging date for businesses not registered for PAYE is 01/04/2017.

For information of users:
This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.