Inform

2012 Auto Enrolment coming.

For those of you that either run small businesses or are part of a business where no pension is currently being provided, I wanted to make you all aware of NEST.

NEST will be a low cost private pension aimed at those between the ages of 22 and 65 who do not have access to an adequate work based pension scheme.

Auto-enrolment and NEST will start from 1 October 2012. The only exception is very large employers with 50,000 employees or more. These will be able to go earlier.

Phasing and timetable

The start date for each scheme will depend on its size and PAYE reference. Where an employer has several PAYE numbers, auto enrolment for all employees starts from the earliest date.

Auto-enrolment – the basics

All employers will have to automatically enrol staff who are:

• Aged 22 to State Pension Age

• Earning more that the income tax threshold (£7,475 in 2011/12) and

• Not currently in a qualifying pension scheme

This is either into NEST, or an alternative ‘qualifying pension’ (i.e. a personal pension scheme or an occupational pension scheme).

Employees of all employers, irrespective of size, must be auto-enrolled. Employers will be able to delay auto-enrolment of new employees for up to three months from the date they join service. Employees who opt-out must be offered the opportunity to rejoin the scheme every three years. If an employee wishes to rejoin then the employer must allow this at least every year.

The statutory minimum will be 8% of a band of earnings currently from £5,715 to £38,185 a year (employer 3%, employee 4% and 1% tax relief on employee contribution). The upper and lower limit is expected to rise in line with the lower limit for NI contributions, and the upper limit in line with earnings. This is to be reviewed in 2017.

For more information or any questions please contact Mark Loughlin at our Maidstone office on 01622 664900.