Workplace Pension Reform (WPR) FAQs

What is Workplace Pension Reform?

Workplace Pension Reform covers changes to pension law affecting all employers with at least one worker in the UK. The Government intends these changes to help address the issues that prevent people from saving into a pension.

Here we will touch on the basics of what's changing.


Automatic Enrolment

Open

The most significant change is Automatic Enrolment. From October 2012 onwards, starting with the largest companies, it became law for every employer to automatically enrol workers into a workplace pension scheme (and contribute to it on their behalf) if they:

  • Are aged between 22 and State Pension Age
  • Earn more than £9440 a year (in 2013/2014)
  • Work in the UK
  • Are not already a member of a qualifying pension scheme

What is a qualifying scheme?

Open

To be a qualifying scheme:

  • Minimum contributions must be made or it must provide a minimum rate at which benefits will build up

A scheme suitable for automatic enrolment must also not:

  • Impose barriers to joining the scheme, such as probationary periods or age limits for members
  • Require staff to make an active choice to join or take any other action prior to joining
  • Require the provision of extra information in order to stay in the scheme

When does this start?

Open

The Staging Date is the start date of an employer’s automatic enrolment duties. If you don’t already offer workers a Workplace Pension Scheme, you must set one up before your business’ Staging Date.

The Staging Date is being introduced over 6 years and is determined by the size of your largest PAYE scheme.

Any employers with fewer than 30 staff on 1st April 2012 will have a Staging Date of June 2015 or later. If you were using a PAYE scheme on 1st April 2012 your Staging Date will now be set.

You can find out when your Staging Date is likely to be by visiting The Pensions Regulator website at http://www.tpr.gov.uk/staging - all you will need is your number of workers and your PAYE reference.

The Pensions Regulator will contact you 12-18 months before your Staging Date to confirm it with you.

Assessing your workforce.

Open

AE (Auto Erollment) specifies three type of worker:

  • Entitled Worker
  • Eligible Jobholder
  • Non-eligible jobholder

Only "Eligible Jobholders" need to auto-enrolled.

  • An Entitled worker can request to join a scheme
  • A Non eligible jobholder can opt in to an auto-erolment scheme
  • An Eligible jobholder must be auto-enrolled.

Review your pension arrangements

Open

You need to be able to provide a pension scheme that automatically enrols eligible jobholders, without the need for any action by the worker.

You also need to arrange membership of a pension scheme for entitled workers and non-eligible jobholders who choose to opt in or join a qualifying pension scheme.

Speak to a professional advisor:

  • If you do not have an existing pension scheme
  • To check if you are already running a qualifying scheme
  • Or

    • To check if the scheme you are running can be made to qualify by the time your Staging Date comes around

    A list of scheme providers can be found here:

    http://www.thepensionsregulator.gov.uk/employers/stakeholder-pensions/registerSearch/SchemeList.aspx

    Communicate the changes

    Open

    Written information must be provided to workers, relevant to their category, (including those already in qualifying pension schemes) about the changes to your Workplace Pension.

    Inform:

    • Entitled workers that they can request to join
    • Non-eligible Jobholders that they can opt in
    • Eligible Jobholders that they will have to be auto-enrolled
    • Eligible Jobholders should also be informed that they have the right to opt out of auto enrolment

    Register with The Pensions Regulator and maintain records

    Open

    Each employer must register with The Pensions Regulator and give them details of their workplace pension scheme and the number of people automatically enrolled.

    For more information on this, visit The Pensions Regulator website at www.thepensionsregulator.gov.uk

    Administrative duties you will need to carry out include:

    • Responding to opt out requests and arranging full refunds
    • Keeping and maintaining records relating to each pension scheme and each jobholder
    • Keeping track of age and earnings
    • Periodically re-enrolling any eligible jobholders who are not members of a qualifying pension scheme
    • Ensuring eligible jobholder contributions are paid by the 22nd (electronic payments) or 19th (cheque/cash) of the following month

    Employers Contributions

    Open
    • You need to contribute to the pensions of eligible jobholders.
    • You do not need to contribute to the pensions of entitled workers
    • You do not need to contribute to the pensions of non-eligible jobholders

    Business Start Up Loans to receive extra boost from high street banks

    Entrepreneurs applying to take part in the government’s Start Up...

    Read more
    IRIS on Twitter IRIS blog IRIS on LinkedIn IRIS on YouTube