Businesses of all sizes and incomes will be forced to abide by the auto enrolment pension legislation over the next five years. Auto enrolment officially begins this month with nine of the UKâ€™s biggest employers set to be first on board.
It will look to incorporate all of the UKâ€™s businesses by 2017 with the smallest entering into the agreement last. Businesses with between 50 and 249 workers will need to implement the scheme between 2014 and 2015; those with 30 to 49 staff members will be incorporated at the end of 2015; and those with less than 30 workers are scheduled to be inducted by 1 April 2017.
This gives some leeway to businesses of a smaller nature but that shouldnâ€™t encourage any dawdling. Smaller businesses should use the time to seek out the most suitable pension provisions, whether they may be from NEST (National Employment Savings Trust) or more lucrative occupational schemes that they may already be in place. Those companies with incumbent pension schemes will obviously be best equipped to deal with the new legislation (as long as the scheme meets the governmentâ€™s minimum criteria), whereas smaller businesses like shops, cafes and pubs may suffer more upheaval due to lack of specialist knowledge and Human Resources departments.
NEST will be a common scheme as they are the governments approved body, meeting the minimum standards for employer contributions; starting at 1% (2% in the pot) in 2012, and rising to 3% (8% in the pot) by 2017. This would indicate that the financial demands of auto enrolment on your company may not be as strenuous as you may have first envisaged, but many wise companies will seek to adopt more generous plans in the hope of encouraging staff loyalty and therefore incentivising their workforce.
The UK has an ageing population and the burden for this seems to be shifting from the state to the employer. Companies with concerns over how the auto enrolment legislation will affect them should seek specialist advice and be ready for when The Pensions Regulator informs them of their staging date.