People are living longer which means there will gradually be less working people compared to an increasing number of retired people.
In October the Government introduced new legislation to get more people saving for their future. This means employers will have to automatically enrol certain employees into a pension scheme and make contributions on their behalf.
Automatic enrolment and the employer duties will be a big challenge for employers and both employees and employers will need to know the rules and benefits.
The main employer duties have been introduced in stages from October and employers need to identify their staging date to determine when the duties first apply and this also sets the date for automatic re-enrolment.
Most employers will have to set up and contribute to a pension scheme suitable for automatic enrolment. They must assess their workforce to determine which type of worker they employ as workers can be categorised as eligible jobholders, non-eligible jobholders or entitled workers.
Employers will have different duties depending on the types of worker they employ and they’ll need to enrol some workers into an automatic enrolment scheme and arrange membership of a pension scheme for others.
Employers will be responsible for the ongoing maintenance of the scheme and have an obligation to keep certain records.
These new employer duties are not optional and The Pensions Regulator will ensure employers comply. Although their approach will be to educate and encourage compliance, employers will face substantial fines or even imprisonment if they don’t adhere to the rules.
While this may seem daunting for employers and their staff, it is a great opportunity for employees to have contributions paid for them by their employers and therefore improve their retirement income, in many cases significantly.
By taking specialist advice and planning in advance, all parties can be ahead of the game, not fall foul of the rules and most importantly, people have the chance to improve their quality of life in retirement.