Auto-enrolment update - new employer pension duties come into force
On 30 June 2012, key provisions of the Pensions Act 2008 and Pensions Act 2011 came into force requiring all UK employers to enrol eligible jobholders automatically in a pension scheme.
Employers will be required to enrol eligible jobholders in a pension scheme from their assigned 'staging' date. The Pensions Regulator will confirm the staging date to each employer 12 months in advance. For large employers with 120,000 or more employees this will be from 1 October 2012, however, large employers have been able to commence auto-enrolment voluntarily since 1 July 2012.
Jobholder’s right to opt in or out of a qualifying scheme
Jobholders who have been automatically enrolled into a pension scheme are those aged between 22 and the state pension age who earn over £8,105 per annum. These jobholders have a right to opt out of the scheme they have joined and they may give notice to opt out of membership within one month from completion of the joining process. Also jobholders not automatically enrolled who do not meet the above eligibility criteria are able to opt into a pension scheme by giving notice to their employer requiring the employer to arrange for them to become an active member of the scheme.
Employment protection measures and employer compliance
Employment protection measures came into force on 30 June 2012 which prevent employers from inducing jobholders to opt out of active membership of a qualifying scheme and from making job offers conditional on opting out. This applies to an employer even prior to it reaching its assigned staging date. The Pensions Regulator will be tasked with monitoring employer compliance and it has issued detailed guidance in relation to this. Employers who fail to comply with the new duties will be issued with compliance notices and penalties which will be determined according to the size of the employer organisation. Criminal penalties would be imposed in the case where there is ‘wilful’ failure to comply with the new duties.
Links to this guidance and our previous articles can be found in the Resources section below.
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