Deadline approaches for employers to enrol staff into workplace pension schemes
New figures released by The Pensions Regulator show that over 600,000 employers have complied with their duties to enrol staff into a workplace pension in the past year alone, since automatic enrolment was launched in 2012. However, the deadline is approaching for the remaining 150,000 employers, including new businesses set up since the government scheme was launched, to enrol their staff by June 2018.
Guy Opperman, Minister for Pensions and Financial Inclusion, said:
“With one million employers – from the small sandwich shop owner to the large supermarket chain – now enrolling their staff into a workplace pension, we are creating a nation of responsible employers who are reassuring their workforce that with their support, they will have a secure retirement.
“Clearly this would not have been possible without the hard work and continued support of employers across the UK. That is why we are committed to working closely with them to prepare for our recently announced proposals which will ensure even more people, including 18 to 21-year-olds, lower earners and multiple job holders, can benefit from a workplace pension in the future.”
Since automatic enrolment was launched in 2012, there have been ‘staging dates’ gradually bringing existing employers and their staff into workplace pensions, starting with the UK’s largest employers, and getting down to the smallest ones.
Research recently published by the Department for Work and Pensions (DWP) highlighted how workplace pensions have become ‘the new normal’, revealing that small and micro employers – which represent 98% of all UK businesses – are finding automatic enrolment ‘necessary’, ‘sensible’ and ‘easier to implement than first expected’. In addition, four in five of today’s eligible workers (83%) now see saving through a workplace pension as the normal thing to do if you are in paid employment.
Currently, to be automatically enrolled into a workplace pension, employees must be aged 22 to State Pension age and earn at least £10,000 per year. In return for employees contributing a minimum of 1% of their pay, employers will at least match it, with most savers also benefiting from tax relief on their contributions.
Contribution rates are set to increase to 5% in April 2018 and 8% in April 2019.
In December, the government published its review of automatic enrolment, announcing a series of major policy proposals that will set millions of people – including younger people, lower earners and multiple job holders – on the path to a more financially secure retirement. The government will introduce these reforms in the mid-2020s, in partnership with employers, and learning from the contribution increases in April 2018 and April 2019. This will ensure that businesses and individuals have time to plan for the changes.
The news coincides with a national government campaign which is encouraging people to ‘get to know your pension’.