They’re something to think about when you get close to retirement, right?
Whether you are an employer or employee, pensions are something you need to make sure you are on top of right away.
From this year, all employers must provide a workplace pension scheme for their staff. It doesn’t matter how big or small your company, how profitable or not or how long you’ve been in business. You must do it.
It’s called automatic enrolment and it’s part of the Government’s attempts to make sure we can all pay for the longer retirements we are now enjoying.
Under the initiative any employer must enrol a member of staff into a pension and make contributions to it if:
The member of staff is classed as a ‘worker’
They are aged between 22 and state pension age
They earn at least £10,000 per year
They normally work in this country
Of course, there are several exemptions and cases where you won’t have to enrol a particular employer. These include:
You’ve already given notice to your employer or they have given it to you.
They have shown you that they already have sufficient pension cover
They already have a pension arranged through you
They get a one-off payment from a workplace pension scheme that’s closed and then leave and rejoin the same job within 12 months of getting the payment
They are from another EU member state and are in a EU cross-border pension scheme
They are in a limited liability partnership
And you won’t have to pay contributions to an employer’s pension if they earn less than £490 per month, £113 per week or £452 per 4 weeks.
Once a member of staff has been enrolled, it is the employer’s duty to tell them and let them know the date they were signed up, who runs the scheme and how much both you and they will be paying into it. You’ll also need to provide them with the details of how they can leave the scheme, how they can defer their registration date and how tax relief applies to them.
There is an option to delay enrolment by up the three months in most cases, though this can be longer in the case of defined benefit pensions or schemes which are a mix of defined benefit and defined contribution pensions.
But you must let the employer know of any delays and make sure they are enrolled in the meantime if they ask to be.
Of course, you simply cannot discriminate against anyone on the basis they are in a workplace pension or put any pressure on an employee to make them opt out.
And if you think you’ll take a gamble and not fulfil your responsibilities, be warned. The Pensions Regulator has already said it is ramping up its investigations into rogue employers and will not hesitate to bring prosecutions against anyone who tries to dodge the law.