What Small Businesses Need to know about Pensions from October 2012

This article talks about UK pensions auto-enrolment which took effect in the UK from October 2012.

Prior to October 2012, your only pension obligation an as employer was to  make a stakeholder pension scheme available to your employees — that is if your business contains five or more employees

From October 1 2012, irrespective of the size of your business, you will need to provide a qualifying pension scheme to your staff and you will be legally required to make a contribution to it.

This qualifying scheme could be a government approved:

  1. Occupational Pension,
  2. Personal Pension (including stakeholder plans) or,
  3. National Employment Savings Trust (NEST)

However, this new requirement will gradually be introduced between 2012 and 2016, based on how many employees you have.

The date that this change becomes applicable to your business is known as your staging date. Larger employers will have the earliest staging dates and small employers will have later staging dates.

You can find out what your staging date is likely to be at this location.

The Pension Regulator highlights that there is nothing to stop an employer establishing a qualifying pension before their staging date.

At the staging date, your main obligations will be to:

• provide a qualifying scheme for your workers
• automatically enrol all eligible  jobholders into the scheme
• pay employer contributions for eligible jobholders to the scheme
• tell all eligible jobholders that:
– they have been automatically enrolled and
– they have the right to opt out if they want
• register with the UK Pensions Regulator and give us details of your  qualifying scheme and the number of people  that you have automatically enrolled.

As an employer you will be required to contribute a minimum of 3% of your employee’s earnings. The employee will be responsible for paying the rest and the combined employer employee contribution must be a minimum of 8%.

Even if your company already operates a pension scheme, you will need to check with your pension provider if this is a qualifying scheme. If you require more information on this please read this guidance document from the UK Pensions Regulator.

There is nothing to stop you from establishing a qualifying scheme now, (which is likely to be well received by your employees), and keep you ahead of the game in the employer of choice stakes.

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