On the 1st of October this year, the Government’s new Pension Auto Enrolment law will start to take effect, with the first group of employers automatically enrolling their qualifying employees into a work pension scheme.
“This is a positive change which will help many people who would otherwise not have the means or motivation to save for their pension,” says Pieter Carstens of 1st Contact Umbrella. “Many people seem to simply ignore their pension needs until it’s way too late, which causes them a lot of misery in their retirement years. This will ensure that many people will be properly taken care of later in life, instead of having to rely on the government.”
Why Auto Enrolment?
People are living longer and longer and most are not properly preparing for their retirement. The Government took the decision to introduce a law that makes it mandatory for people to save up for their golden years. Starting from October this year, employers will be required by law to automatically enrol their workers into a workplace pension if they meet certain criteria.
Automatic enrolment will help to address some of the issues that have prevented people from saving into a pension fund before, for instance a lack of suitable pension products, the products and procedures being complicated and a lack of funds.
This scheme will ensure that every qualifying employee has a hassle free way to ensure their retirement years are taken care of. And because the company contributes at least the same as the employee, and the Government contributes too by way of tax relief, the individual’s pension can build up much faster than if they were saving on their own.
Which employees will qualify for automatic enrolment?
Employees will automatically be enrolled into a workplace pension if they:
- are not already in a qualifying pension scheme
- are 22 years or older
- are under the State Pension age
- earn more than £7,475 a year
When will it take place?
The roll-out will begin on the 1st of October 2012, with large corporates the first to start enrolling their employees. Thereafter, companies will have a specific date allocated to them, dependant on the size of the company.
1st Contact Umbrella is in the process of preparing the right solution and will keep their clients informed.
To find out more about 1st Contact Umbrella and their services, please visit http://www.1stcontact-umbrella.com or call 0808 141 2341.