Meeting your pension duties as an employer
This guide was updated in April 2015 to reflect new rules published by the Financial Conduct Authority in February 2015.
The cost of providing state pension benefits is set to increase significantly. We are all living longer and,as a result, the population of pensioners is rising relative to workers, whose taxes fund the state pension system. From 2020 the state pension age will increase beyond 65 for men and women. By this time, it is also likely our rather complicated and tiered state pension provision will have been replaced by a new flat-rate system.
While these measures will go some way to easing costs in the future, they do not address the fundamental problem that today's workers are not saving enough for later life. The government estimates that around 10 million people are currently not saving enough for their retirement, and as a result it is putting the onus on employers, through automatic enrolment, to help encourage their workers to save. Under the new legislation, by February 2018 every employer, regardless of size, will be required to automatically enrol certain workers into a qualifying pension scheme and make contributions towards it.
In April 2012 all employers were allocated a staging date based on the size of their workforce (the number of individuals in their PAYE scheme as at 1 April 2012). Your staging date signals when your automatic enrolment duties commence.
Even if you already operate a pension scheme, you will still need to undertake some planning to prepare for your duties. There are a number of things you need to consider and decisions you need to make well ahead of your staging date.
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