Dave Martin who works for a company of London based benefit fraud experts says it is vital citizen know of changes in retirement plans, to avoid inadvertently committing benefit fraud.The timetable for auto-enrolment in pension schemes has been changed. Originally planned to be complete in 2015, final stages have been delayed until now in 2018.
Plans to enrol all eligible UK employees into company pension schemes have changed with deadlines for minimum contribution levels extended by three years. How will the program now work and what will these changes mean for employers and employees?
What is Auto-Enrolment?
This program will basically automatically enrol every eligible employee into a pension scheme run either by their employer or the government. It was established to try and reduce the number of people who do not actively save for retirement. Once the deadlines are in place, employees will have to actively opt out of a plan if they do not want to participate. At the moment, they generally have to opt in – this current system isn’t working, hence the change.
How Will Automatic Pension Enrolment Work Now?
Some of the initial milestones will still work to deadline although the stage dates will change for some companies. For example, enrolment will still be phased in from the 1st of October 2012. This will be graded by PAYE size, so larger employers will have to auto-enrol first, with smaller ones following at set dates in stages. This is still likely to take until 2018, the final deadline for start-ups.
The change will, however, most affect the timescale for statutory minimum contributions. Initially, employers were instructed that they had to achieve these levels in 2015. This has already been pushed back to 2017 and is now timetabled for October 2018.
How Will This Change Affect Employers and Employees?
Companies will be given more time to build up contribution pots (made up from both employer and employee contributions) and, in some cases, more time to set up their auto-enrolment/pension structures. This may well be a relief for smaller businesses that could find the pension plan set up, together with a relatively quick build-up of minimum contributions, a strain on their finances and resources.
Employees, however, may not see the delays to minimum contribution levels in such a positive light even though some are worried about ‘losing’ income to pay into a plan. Technically, a company on an early timetable could enrol its workers this October. But, this additional delay could mean that workers will have to wait longer to build minimum levels in their pension pots.