Auto-enrolment is here......are you ready?
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What is Auto-enrolment?
Auto-enrolment was introduced by legislation commencing from October 2012 to help more people start saving for their retirement. The legislation states that all employers must offer a workplace pension scheme and automatically enrol “eligible” workers into it and make pension contributions on their behalf. Initially this requirment applied to larger employers, but as we start to see auto-enrolment roll out to medium and smaller sized employers, the pensions industry expects to see capacity issues in terms of both available pension advisers and pension scheme providers. Employers are therefore advised to plan early for their auto-enrolment duties.
Why is it happening?
People are now living longer than ever before. This means that they will enjoy a longer retirement. However, people are either not saving for it or not saving enough to provide them with the security they require. Auto-enrolment has been designed to bridge this funding gap and encourage people to think more about how they will fund their retirement.
What happens if I don't automatically enrol my employees?
However, non-compliance is not an option for employers. The Pension Regulator has a range of powers including fines ranging from fixed penalties of £400 to escalating penalties of up to £10,000 per day. It is therefore paramount that employers understand both their auto-enrolment duties and the deadlines for each of the statutory duties.
The Financial Conduct Authority do not regulate auto enrolment.