UK: Workplace Pensions And New Start Ups

The duty on employers to automatically enrol workers and employees working in the UK into qualifying workplace pensions was introduced in October 2012. Given the scale of the task this was phased in: the duty first applied to the largest employers and was gradually extended so that the smallest employers had their "staging date" – when the legislation started to apply – on 1 April 2017.

For new employers, established between 1 April 2012 and 30 September 2017, the duty was also phased in. So employers which first paid PAYE income between 1 October 2016 and 30 June 2017 will be subject automatic enrolment from 1 January 2018. Employers established between 1 July 2017 and 30 September 2017 are subject to automatic enrolment from 1 February 2018.

However, for new employers – who first pay PAYE income on or after 1 October 2017 – there is no longer any lead-in time. The duty to designate a suitable pension scheme and make contributions begins immediately – in much the same way as other employer duties such as operating PAYE and making NI contributions would start immediately.

Clyde & Co comment:

There may be further changes to automatic enrolment. The Government is carrying out a review which is due to report at the end of the year and which could lead to further changes – such as extending automatic enrolment to 16 to 22 year olds, the self-employed and those earning below £10,000 pa and changes to the rates of saving.

It is still possible to defer the application of automatic enrolment for up to three months by giving a notice to employees/workers. But employees/workers can still opt-in to pension saving (and receive the benefit of the employer contributions) during the deferral period. A deferral notice has to be issued within six weeks of the employee/worker becoming subject to automatic enrolment.

The transitional contributions will also continue to apply to new employers. So the minimum contribution rates, with an increase due in April 2018, are:

The Pensions Regulator's press release is available here

Workplace Pensions And New Start Ups

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