If you are a business owner, you must be aware of the pension auto-enrolment scheme adopted in UK’s workplaces. Here is all that you need to know about it:
What is the Pension Auto-Enrolment?
According to the pension auto-enrolment, employers need to automatically enroll their eligible workers into a pension scheme. They are also required to make contributions to it. This scheme has been initiated with the aim of helping workers make more savings for their old age.
Who are eligible for the Auto-Enrolment scheme?
- Are employed in the United Kingdom
- Are aged over 22 and below the state pension age
- Have not yet been enrolled into any pension schemes
- Earn a minimum of £10,000 a year
How much contribution do business owners have to make?
When it comes to contributions, there are minimum standards set by the government which every business owner must obey. The minimum contributions at the beginning are at 1% of the earnings and rise to 3% in the following years.
Some tips on the pension auto-enrolment
- Business owners must start planning well in advance of their staging date. With good planning, you will be able to carry out the scheme efficiently.
- Selecting the right pension scheme is an important decision. You will need to consider the approach of the investment, how easily it can be carried out etc.
- Inconsistencies in payroll data will hamper the effective run of the scheme. So ensure that your payroll is well managed.
Your responsibilities do not end once you have enrolled your workers. You have to make regular contributions, assess the age and earnings of your workers and new employees, handle joining and opt out requests, prepare well maintained records and re-enroll employees every three years.