Pensions Auto-Enrolment: Changes coming into force 1 October 2012

Until recently, there was no obligation on employers to contribute to a pension scheme for employees, and employers with less than 5 employees were exempt from the requirement to provide access to a stakeholder pension.

However, new laws have come into force which will eventually require all employers automatically to enrol eligible jobholders onto a pension scheme. Unless a jobholder chooses to opt out of the pension scheme, their employer will be obliged to make mandatory minimum contributions to that scheme. The primary starting date for auto-enrolment will be 1 October 2012, with larger employers expected to comply with the new obligations before smaller ones. There is a staged implementation timetable so that smaller employers (with between 50 and 249 employees) will not be subject to auto-enrolment until April 2014 at the earliest and those with fewer than 50 employees will not have to comply before June 2015.

Therefore, although auto-enrolment is fairly topical at the moment, because of the 1 October 2012 start date, smaller employers should not yet be too concerned about having to implement any changes.  However all will need to plan ahead, in terms of budgeting for this change, because of the cost implications for employers who do not currently provide pension contributions.

Please contact the Employment Team if you would like further information about the new obligations, how they will affect your business or how the staging process will work.