The framework for these new laws is already in place in the shape of the Pensions Act 2008. Employers will, for the first time, be required to automatically enrol eligible employees into a pension scheme.

Employers will, for the first time, be required to pay pension contributions for any employees who join and stay in the pension scheme. The Pensions Regulator will police and enforce these new laws. Even if you have an existing workplace pension scheme, you may have to make changes so that it complies with the new laws.

Employers can either use their own pension scheme to comply with these new laws or rely on a Government built scheme - the National Employment Savings Trust (NEST) scheme. Do you want to keep control of your employee benefits package or rely on someone else, who knows nothing about your business, to do it for you?

The employer duties will be staged in over 4 years from 2012. Larger employers will have their duties imposed first, smaller employers last. Any employer with less than 50 employees will have their staging date set depending on the last two digits of their PAYE reference number.

From October 2012, employers will be required by law to:

• automatically enrol all their eligible employees not already in a good quality pension scheme into a Qualifying Workplace Pension Scheme (QWPS) on the day the employee becomes eligible, and
• pay contributions for every employee who does not opt-out of the QWPS.

The amount of contributions that must be paid in order for a scheme to be treated as a QWPS is being phased in as follows:

The contributions will be based on a percentage of band earnings between £5,035 and £33,540 (qualifying earnings) at 2006/2007 levels. These amounts will be increased in line with earnings to 2012 and beyond.

*  The minimum difference includes tax relief available on employee contributions.

All employees will have to be auto-enrolled unless:

• they are already in a qualifying workplace pension scheme,
• they are under the age of 22,
• they are over the State Pension Age, or
• they earn less than £5,035 a year (in 2006/2007 terms).

Employees can only ‘opt-out’ once they have been auto-enrolled.

Non-eligible employees must be given the option of opting in to pension saving.

Auto-enrolment is the responsibility of the employer, not the Government or the pensions industry. The Pensions Regulator will oversee employer compliance and has the power to fine employers for non-compliance.

Quality Qualifying Workplace Pension Scheme (QQWPS)

Employers can avoid much of the administration burden associated with automatic enrolment by setting up a QQWPS where:

• the total minimum contribution is 11% of qualifying earnings, of which
• at least 6% must come from the employer,
• there is no option to phase in contributions, and
• automatic enrolment dates can be postponed up to 90 days allowing a ‘sweep up’ of eligible employees all at once at the employer’s convenience.

National Employment Savings Trust (NEST)

Employers who do not have, or who will not set up, their own QWPS will have the option of using NEST. This scheme is designed to be low cost and is specifically aimed at low to medium earners. There will be certain restrictions applying to NEST:

• there will be a general ban on transfers in or out,
• there will be an upper contribution limit (currently £3,600 each year),
• limited retirement options and
• limited investment options.

As financial advisers with 22 years experience in the pensions industry, we’re familiar with the challenges that businesses will face in light of these new laws and regulations.

We can:

• Help you review your existing workplace pension scheme to make sure it will comply with, or exceed, the new requirements, or
• If you haven’t got a pension scheme yet, we can help you put one in place.

And we can help with arrangements such as salary exchange that can save you money and offset the impact that these new laws will have on your business.

What Next?

Please complete our simple enquiry form and once of our consultants will contact you.

• We can provide a free consultation about the changes.
•  Offer a seminar on your site to explain how the proposed changes will affect you and your employee’s
• Review your existing arrangements to see how they will be affected by the changes
• Discuss a brand new scheme if you don’t already have one!