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Automatic Enrolment

What is Auto-Enrolment?

Auto-enrolment is a new Government initiative to encourage workers to pay into pension arrangements. The Government recognises that many workers are not building any pension provision for the future and fail to take up valuable pension benefits because they do not make an application to join their employer's scheme. Auto-enrolment is designed to combat this and will mean workers being automatically enrolled into their employer's qualifying pension scheme without any active decision on their part.

From 1 October 2012 (subject to the employer's own introduction date), all eligible workers - aged between 22 and state pension age and earning above the income tax personal allowance rate (£7,475 in 2011/2012) will start to be auto-enrolled into a qualifying pension scheme. Contributions will be payable on earnings between £5,035 and £33,540.

Eligible workers will be able to opt out of their employer's scheme if they have chosen not to participate, but will have to give notice during the formal opt-out period and will be put back in the position they would have been if they had not become members in the first place, which may include a refund of any contributions taken following auto-enrolment.

All employers will be required to repeat the auto-enrolment process every three years, normally from their anniversary staging date, but with the flexibility of three months either side. This will then capture previous opt outs; however, any employees who opted out during the preceding 12 months will not be auto-enrolled until the following three-year anniversary.

Please see Pensions Regulator website - auto-enrolment process for more information on this process.

 

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