‘This is a guest post written for us by Michael Howard.
This month saw the roll out of the government’s bold new pension initiative begin in earnest. Auto enrolment pension legislation is designed to automatically induct citizens into their company’s pension scheme thus defeating any apathy we may have had towards the pension question.
This has two obvious implications; one for the employer as companies of all sizes will need to register a pension scheme that meets the minimum criteria laid out in the legislation, the other for the employee who will retain the right to opt back out of the scheme. For the first time UK citizens will have to be much more pro-active in addressing the pension question.
In 2001 the government tried to push stakeholder pensions but the initiative had no foundations in law and so made little impact. To highlight the extent of the dilemma the government is attempting to solve 3 out of 10 UK companies don’t have an incumbent pension scheme in place for employees to utilise. The auto enrolment pension legislation is set to change that completely as all companies of all sizes will legally be required to have a scheme in place by 2017. Small shops, pubs and other minor employers will all need to offer pension plans, which is a major part of the reasoning behind the initiative.
The government has approved a NEST pension scheme, which may fill a lot of pension scheme gaps in the world of small business although companies are free to find their own private schemes as long as they meet minimum criteria regarding contributions and transferability. Seek advice and possible alliance with NOW:pensions for credible alternative private schemes.
To make the legislation fairer on small businesses their staging date for the auto enrolment pension will come later. The first companies to be legally obligated will be the largest employers with a core of 9 large companies set to take the dip first and become the standard bearers for the scheme.
Any UK citizen that is over the age of 22 and under pensionable age, earning over £8,105 per annum, ordinarily working in the UK and not already part of a scheme will be eligible. The scale of the auto enrolment pension legislation is clearly huge.
