Workplace Pensions Reform
Millions of people are not saving enough to have the income they are likely to want in retirement. Life expectancy in the UK is increasing and, at the same time, people are saving less into pensions. The Government has made it clear that people should take responsibility for their retirement and start saving as early as possible.
New pensions legislation, known as the Workplace Pension Reforms (WPR), has been introduced which is designed to combat the chronic underfunding of retirement benefits for employees throughout the UK, primarily within the private sector.
‘Employer Duties’ as they are known, will be introduced over a rolling 5 year timetable from October 2012 according to the size of the workforce. The first task will be to establish your ‘staging date’. This is the date by which you will need to have auto-enrolled all eligible employees and begin employer and employee pension contributions.
For the employer, the administration requirements are onerous; for instance, the auto-enrolment process needs to be repeated every three years and, for each eligible employee, once they meet the criteria for auto-enrolment which could be at any time depending on your recruitment policy and staff turnover rate. The Pensions Regulator also requires annual returns and a system needs to be established to cater for this part of the process.
This represents a big change to the current legislative environment for workplace pensions and it affects all employers – even those with just one employee. All existing employee pension arrangements (including stakeholder schemes) will need to be reviewed to ensure compliance and employers who do not currently provide a scheme will need to select and establish an arrangement suitable for their needs.
If you would like to discuss this further please contact us.