In order to help more people save for retirement, the government welcomed auto enrolment reforms for workplace pensions in 2012. This means that it has become obligatory for all employers to automatically enrol their employees in a workplace pension, as long as they meet certain requirements regarding factors such as their age and earnings.
How Does it Work?
When enrolled, employees pay a percentage of their salary into the pension scheme automatically each payday and employers will top it up. Employers must write to their employees within six weeks of their enrolment date, with all the relevant information. There are different types of pension schemes with different requirements, including NEST which was set up by the Government.
During paid leave, such as maternity leave, employees and employers will continue to pay into the pension scheme. The current contribution rate is 2%, of which 1% is paid by the employer. This will increase to 8% from April 2019. Employees and employers can contribute more if they wish. During paid leave, such as maternity leave, employees and employers will continue to pay into the pension scheme
The scheme is not compulsory and employees can choose to opt out if they want to.
What Can GEM Do?
Organising automatic enrolment can often be complicated and time consuming. Employers must first evaluate their workforce to determine who is and isn’t eligible according to clear conditions, then they must choose a pension scheme and communicate with their employees throughout the process.
With excellent knowledge of the regulations, GEM will happily take control of auto enrolment for employers as part of the payroll services, allowing you to concentrate on other tasks. This service involves setting up your automatic enrolment pension scheme by selecting an appropriate pension provider, writing to employees before they’re enrolled, calculating the percentage of each employee’s qualifying earnings, and maintaining the scheme thereafter.