2. What is auto-enrolment?
The compulsory inclusion of all employees in a pension
scheme with contributions also from the employer.
3. Why is auto-enrolment
being introduced?
• In 2001 stakeholder pensions were introduced to offer
low-cost pension plans; membership of stakeholder
pensions was voluntary and take-up was low.
• Auto-enrolment is compulsory and aims to encourage
saving for retirement.
• Once in the scheme, members can opt out but the
employer must put them back in again every three
years.
4. Who must be auto-enrolled?
Everybody. The only exemptions are employees earning
less than £5,035 and employees under age 22 or over
state pension rate.
5. When?
The largest employers will auto-enrol first and it will be
a gradual process until all employers are included.
For an organisation with:
• 5000 staff May 2013
• 500 staff November 2013
• 50 staff July 2014
6. How much?
The contributions will be phased in:
• 1% salary from the employer and 1% salary
from the employee at outset
• 2% employer and 3% employee from 2016
• 3% employer and 5% employee from 2017
7. How?
Each employer will need to set up a pension scheme
and include all staff in the scheme. Most employers will
be setting up new group personal pension schemes to
satisfy the requirements – Wentworth will help you with
this.
8. What about corporation tax relief?
The employer’s contribution should attract corporation
tax relief as a business expense.
9. Will the members
receive a tax break?
Yes. The members receive basic rate tax relief
(currently 20%) on their contributions.
For example, the 5% member contribution payable
from 2017 will actually cost the member 4% salary
with HMRC paying 1% salary via tax relief.
10. Can we obtain independent
pensions advice?
Yes. Wentworth are on hand to provide continual
impartial advice to the employer and the members
about this new pensions regime.
Please leave your details on our ‘Contact Us’ section
and we will be in touch.
