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Autoenrolement is a legislation which has come into place in the UK around five years ago. Nevertheless, despite its prominence and the number of people it will affect, a lot of individuals are in the dark about what it is. This article aims to give a helping hand with that. It will provide you with information regarding auto-enrolment. This includes what it is, who it affects and more. The aim is to make people more aware of the law and thus make them better equipped for what may be coming their way.
First and foremost it is crucial to define what auto enrolment actually is. In short, it is a pension legislation which has been introduced in the UK. It is entitled ‘The Pensions Act 2008’. So what does this new law mean? Basically, employees (those who the scheme applies to) will be enrolled into their employer’s workplace pension schemes. This will be done completely automatically and will last for a total of five years.
Now that the basic overview of the legislation has been defined it is important to unearth who this actually affects – and the truth is, most people. This law relates to anybody living in the UK who is employed. They must be over the age of 22 years old yet younger than state pension age. They must not already be in a workplace pension scheme. Furthermore, the final requirement is that they earn more than £10,000 per annum.
So what does this mean for employers? Basically, the employer is the individual who is in charge of enrolling their employees. They must do so – it is not optional on their part. Choosing the best payroll software for your business can help you manage this and all other employee-related finances. Plus, they can use the guidelines stated in the above paragraph to determine who is entitled to autoenrolement and who is not. Workers are free to opt out of this scheme if they wish to do so. However, employers are completely prohibited from trying to convince, tempt, offer incentives or use any other method to try and make workers opt out. This includes even those you being interviewed for a potential job.
Remember, this is a law so if employers do not follow the rules then there will obviously be punishments handed out. For those who do not enter their employees into the scheme they will be forced to pay a fine of around £400, this may continue in the form of a fine every single day until they complete the auto enrolment. This may not seem like too much money – but it gets a lot worse. The daily fine can be anything up to a huge £10,000 a day for big companies.
All in all, it is important to be aware of the auto enrolment legislation and what it brings with it. Employers need to know their role and what the government expects them to do. Furthermore, failure to comply can clearly result in some harsh and unwanted fines.