The Pensions Act 2008 contains provisions which will make it compulsory (from 2012 for larger employers and 2015 for smaller employers) for an employer to enrol qualifying workers aged between 22 and the state pension age who earn more than a de minimus amount (currently set at £5,035 per annum) into a pension scheme and to make contributions to the scheme.
On 9 December, the Chancellor announced that there will be some concessions to the rules for new businesses and ‘micro businesses’, which will mean some employees may not have to be enrolled into a pension scheme until 2016. Details of the implementation plan are expected to be announced imminently.
Under the provisions, the employer will be required to contribute a minimum of three per cent of salary. The employee will be required to contribute a minimum of four per cent of salary, up to a maximum amount.
The provisions will be phased in over four years, at the end of which (from year five onwards) the combined employer and employee contribution must equal at least eight per cent of salary.
There will be substantial fines for failure to comply with the new regulations.
Clearly, there are likely to be many changes to the provisions between now and the planned implementation dates, but this is a good time to start thinking through the potential impact of the new regime on your business.
Partner Note
The Pensions Act 2008 can be found at