Pensions auto-enrolment comes into force

25 January 2012
Pensions auto-enrolment comes into force

From 1 October 2012, large employers with more than 120,000 staff begin automatically enrolling all eligible staff into pension schemes. Smaller organisations will be phased in over the next four years.

What is auto-enrolment?
Auto-enrolment is where employers are required to automatically enroll eligible job holders onto a qualifying pension scheme and make a minimum contribution to their employees’ pension. 

When is auto-enrolment being introduced?
Auto-enrolment will be phased in between October 2012 and October 2016 in the UK. 

Why is the pensions system changing?
It’s well documented that people are living longer in the UK and on the whole, not putting aside enough money for when they retire. As a result, provisions were put in place in the Pensions Act 2008 and the Pensions Act 2011 to ensure that low to moderate income households have sufficient savings for retirement. 

So what will voluntary organisations need to do for when auto-enrolment starts?
You’ll need to:

  • have a qualifying pension. This may be a scheme you have already which qualifies - or set yourself up with one that is suitable such as NEST, the new low-cost pensions scheme being introduced
  • automatically enroll all qualifying employees onto your pension scheme.
  • make a minimum contribution to your employees’ pensions (contribution levels are being gradually phased in between October 2012 and October 2017 up to 3%).

When auto-enrolment comes into force, who will it affect?

Auto-enrolment will apply to all organisations employing someone. Workers will have to be enrolled onto a suitable pension scheme if they:

  • are 22 or over but below the state pension age
  • work in the UK
  • earn more than a minimum threshold (for 2012/13, this is likely to be the income tax threshold).

When will auto-enrolment apply to charities?

It depends on how many people your organisation employs.

Larger organisations (ie those employing more than 120,000 people) will be phased in first. After this, each organisation will be given a date on which they should enroll and start contributing to people’s pensions. This is known as your ‘staging date’.

Currently those employing between 50 and 500 employees are expected to be phased in during 2014. Those with less than 50 employees will be phased in between 2015 and 2016. Find out your staging date here

What should I do in the meantime?

  • If you employ more than five people, you should ensure that you have an occupational pension scheme you offer to staff.
  • You may want to find out if your current pension scheme would be suitable for the purposes of auto-enrolment. You can check this through the Pensions Advisory Service website 
  • Budget for the additional costs.

For further information, see: 

Please note that HRBird by its very nature offers general information. If you're looking for advice specific to your situation, speak to an HR professional or solicitor. Got a question on staff or volunteers? To submit an anonymous query for the HRBird blog, contact us.

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