United Kingdom

Auto-enrolment first employee staging date

July 2017

 

Businesses employing staff for the first time on or after the 1st October 2017 will be required to comply with auto-enrolment on the day the first employee starts work, The Pensions Regulator (TPR) has confirmed.

Auto enrolment, first announced in the 2008 Pensions Act, requires every UK business to provide a pension scheme for eligible staff whilst contributing a percentage of an employees salary each month. Since its introduction in 2012, around 7.5 million people have been automatically enrolled in workplace pension schemes.

In April, TPR announced that the 500,000th UK employer had completed their workplace pension duties. In the first three months of 2017, 136,000 small and micro employers had become fully auto-enrolment compliant.

Staging dates between October 2012 and April 2017 were assigned to all businesses, dependent on number of employees to ensure businesses had enough time to prepare for auto enrolment duties.

Any company either officially launching or employing staff for the first time after April 2017 are obliged to comply with this legislation either from January or February 2018, depending upon when first payment was made to a member of staff. But the latest guidance from the TPR now advises that anyone employing staff for the first time after 1st October 2017 will have to ensure they are fully compliant as soon as their first employee starts work.

"This is a significant shift in policy," said Adam Burn, senior pensions consultant at Aon Employee Benefits. "Previously, a future staging date gave organisations time to plan for this and make sure they took suitable advice & guidance to comply with the legislation. But with the new regulations, employers will have to make sure they deal with this from day one along with all the other aspects of employment."

Staff who are aged between 22 and the State Pension Age and earning either £10,000 per annum, £833 per month or £192 per week, are eligible for auto enrolment. For staff who do not meet this criteria, employers must still carry out certain duties to remain compliant.

In June, the Department for Work and Pensions revealed that 78 per cent of eligible staff saved into a workplace pension during 2016, thanks to auto enrolment, but subsequent research by Scottish Widows showed that half of young people have said they will opt out of auto enrolment when the contribution rates increase in April 2018.

Burn added: "In the main, auto-enrolment has achieved its intended aim of increasing pension savings and awareness. However, the increase to contributions coming into effect from April next year is likely to present a challenge as the cost increases for most employees. The need for education and employer support for employees is going to be more important than ever."

 

 

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