Employers with more than 5 employees were required, until 1st October 2012, to help their employees access a stakeholder pension scheme but this requirement has now been abolished with the introduction of the so called auto-enrolment pension scheme. However, transitional provisions do still allow an employer to continue deducting contributions from the salary of an employee who is an existing member of a stakeholder scheme after 1 October 2012. It's best to check with the scheme provider for further guidance on this.
Auto-enrolment means that all employers must enroll their workers into a qualifying workplace pension scheme if they are not already in one. A qualifying scheme can be:
- A defined contribution scheme with a minimum contribution; or
- A defined benefit or hybrid scheme which meets certain conditions.
Employers have to automatically enroll workers who:
- Are not already in a qualifying workplace pension scheme;
- Are at least 22 years old;
- Are below state pension age;
- Earn more than £8,105 a year; and
- Work or ordinarily work in the UK (under their contract).
Although automatic enrolment comes in from 1 October 2012, individual employers' duties will be phased in gradually over the following five years, and will be based on the employer's size.
Given that repeal of the stakeholder requirements has not been aligned with the Department of Work and Pensions timetable for the new auto-enrolment duties, an employer will no longer be obliged to provide access to a pension scheme until it becomes subject to the duty to auto-enrol its eligible jobholders. This could leave new employees with a gap in their pension provision.
The Pensions Regulator has guidance on employers? obligations under the 'auto-enrolment' rules.
This includes an easy to follow 7 stage process to help employers prepare for auto enrolment with advice on how to calculate the staging date (i.e. the date when to join the scheme) depending on PAYE and number of employees.
