What you need to know about the new UK pension legislation

Employers have new duties to comply with starting from October 2012. Changes have been made to the UK pension legislation, introducing auto enrolment. This is a new scheme which involves the employer automatically enrolling their employees into a pension scheme which both employer and employee contribute to. There are certain eligibility requirements for jobholders and it is for the employers to take on the responsibility of informing their employees if, and how, the changes will affect them.

You will be contacted by your employer if you are eligible, but it is easy to work out if you are or aren’t. You must meet the following requirements: You must be working in the UK under a contract (temporary workers included), you need to be between 22 years old and state pension age, and you must be earning above £8,105. Even if you are eligible, you have the right to opt out of the scheme.

The employer will be given a staging date. The changes will take time and will be implemented between 2012 and 2018 starting with big businesses, and each business will have to figure out which of its employers are eligible and when they can start putting it into effect. This is determined by the number of employees in the company, more information can be found at http://www.hmrc.gov.uk/pensionschemes/index.htm or at http://www.pensionsweek.com.

A company should provide a pension scheme anyway with a reputable provider like Now Pensions and must contact the right people to ensure that their scheme qualifies.  After enrolling the eligible jobholders they must pay contributions of 3% of the jobholder’s earnings and make sure that the employees are up to date and well informed of the changes.

The reason for the new auto enrolment system is the increasing need for our ageing society to be comfortable in retirement years. Often people don’t put enough money into their pensions to be able to live on in retirement.

3 thoughts on “What you need to know about the new UK pension legislation”

  1. Sometimes I’m glad I’m at the ‘winter’ stage of your seasons.
    Like many, I got caught in the annuities reduction, interest rates reduction, inflation growing faster than (what I thought was) conservative interest rates.
    I did put into retirement funds what seemed to be required but was beaten by bank failures and recession.
    Anyone who has any time left to retirement needs to find a different way of providing for retirement.

  2. Sounds like a good initiative, having to register may be something you postpone for month, and if there is an employer match, better have it from the start. Reminds me I have to check on my pension!

Leave a Reply

Your email address will not be published. Required fields are marked *