Pension Auto Enrolment

From October 2012, the government introduced pension reforms and all employers are now required to offer their employees, who meet certain criteria, automatic enrolment into a workplace pension.

This can be either via NEST (National Employment Savings Trust) or via another qualifying/certified scheme. NEST will carry an annual management charge of 0.3% per annum as well as a 1.8% initial charge on all contributions.

Employers are required to automatically enrol all eligible jobholders earning in excess of £10,000 a year (2015/2016) into either the National Employers Savings Scheme (NEST) or an alternative ‘qualifying’ workplace pension and to make minimum contributions into it.

This process is staged, dependent on employee head count, from 1st October 2012 to 1st September 2018, with large employers being the first to have to take action.

Under auto enrolment, employers will need to contribute 3% on a band of earnings for eligible jobholders between £5,824 (the lower qualifying earnings band limit for 2015/2016) and £42,385 (upper earnings limit for 2015/2016).

This will be supplemented by the jobholder’s own contribution and around 1% in the form of tax relief. Overall contributions will total at least 8%.

Employers will be able to choose the pension scheme(s) they want to use provided the scheme(s) meet certain quality criteria (including any current scheme). These may be based on contributions or benefits people receive.

To help employers adjust gradually, employer contribution levels are also phased – starting at 1% and then moving to 2% and finally 3%.

The jobholders’ contributions will also be phased over the same period.

For more information on pension auto enrolment or any other pension advice, please contact our independent financial advisers. We serve clients across East Sussex, including Eastbourne, Uckfield, Lewes, Crowborough, Hastings, Seaford, Newhaven, Tunbridge Wells, Brighton and Hove. Recommendations have led to gaining clients well beyond Sussex too.

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