We’ve known for some time that in future employers will be obliged to provide a contributory pension scheme for employees, and that rather than opting in, employees\u00a0will\u00a0only\u00a0be able to opt out.<\/p>\n
We’ve known that the timetable for implementation of this scheme depends on the number of employees on the payroll, that very large employers are caught from next October,\u00a0large ones from 2013, medium-sized from 2014, and all employers by 2016.<\/p>\n
We’ve known that over time, the minimum employer contribution\u00a0increases from its 1% introductory level to 4%.<\/p>\n
What we really haven’t known is the devil of the detail.\u00a0 Just how “automatic” is the auto in auto-enrolment? Are all employees caught? What kind of pension scheme should be used? Does the employer actually need to do anything?<\/p>\n
The first and last questions are related, and unsurprisingly, the answers are “not very” and “yes” – and allied to the “yes”, there are some pretty draconian penalties for the employer who doesn’t fulfill his obligations.<\/p>\n
A blog isn’t the place to list all the problems the employers going to face, but here are a few tasters:<\/p>\n
Then there’s the scheme itself.\u00a0 The easy answer, especially for employers with no existing pension scheme, will be to use NEST <\/a>, but it won’t suit everyone. If\u00a0there’s an existing scheme, it may be possible to use it – but there may well be problems that result in the existing scheme being maintained for some employees whilst NEST is used for others.<\/p>\n Obviously the employer needs to consider the financial implications of a compulsory scheme – but it’s not just the cost of the employer’s contribution. Can the business payroll system handle the contributions?\u00a0Do the staff operating it actually know sufficient to run it? Is the HR function (if it exists) able to absorb the extra workload?<\/p>\n If you’re an employer reading this and blanching at the thought, have a look at auto-enrolment <\/a>\u00a0– and then get some specialist advice!<\/p>\n ps – there’s a suggestion floating around that due to current economic woes,\u00a0the timetable for implementation may be extended. We can but hope.<\/p>\n","protected":false},"excerpt":{"rendered":" We’ve known for some time that in future employers will be obliged to provide a contributory pension scheme for employees, and that rather than opting in, employees\u00a0will\u00a0only\u00a0be able to opt out. We’ve known that the timetable for implementation of this scheme depends on the number of employees on the payroll, that very large employers are[…] <\/p>\n