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Auto-Enrolment

As people are living longer and likely to enjoy a longer retirement, the UK Govt is introducing Workplace Pension reforms. All the recommendations of the Independent Review on Workplace Pension reforms have been accepted and the Government is now taking these forward in the Pensions Bill 2011 which received Royal Assent in July 2011.     

One of the key changes being introduced is “Automatic Enrolment” which will be introduced from Autumn 2012 (implementation date from 1st October 2012).   

Automatic Enrolment is the core employer duty of work-based pensions reform. It means that employers must automatically place all eligible employees into their pension scheme and advise them that they have done so.  

Currently all employees who are eligible under scheme regulations (aged between 16 and 75 or aged 65 for special class members) are automatically included in the relevant section of the scheme unless they complete a form to opt out.  

From 2012, there are significant changes which employers will be obliged to adhere to. The main aspects will be: 

  • Automatically enrolling all eligible jobholders in the Scheme within 3 months of them taking up employment (without the jobholder taking any action) however, eligible jobholders who wish to be included from day one can do so, with employer contributions also being made from day one
  • Not asking jobholders whether they wish to join, as happens currently
  • Providing new members with information about automatic enrolment and the scheme they have been enrolled into
  • Re-enrolling jobholders, who have previously opted out, after 3 years if they are still working for the same employer
  • Jobholders who have opted out within 12 months of the re-enrolment date are exempt until the next automatic re-enrolment.      

Members can still opt out at any time and scheme rules will apply to refunds of contributions.  

More detailed information can be obtained from Department for Work and Pensions and the Pensions Regulator (Press Release: Know the Basics and Workplace Pensions Law is Changing).

 

Link to Scottish Government Website