What is it?
Auto enrolment effectively reverses the decision most people make about joining a workplace pension scheme. Until now, workers have joined a workplace pension scheme, if one exists, on a voluntary basis but auto enrolment changes that. The new legislation means that ‘qualifying workers’ will be automatically enrolled into a scheme and will have to opt out of it if, for any reason, they’d prefer not to be in one. By making initial membership the ‘default’ position, it’s hoped that millions of workers will then stay in the scheme and help themselves to a better retirement with less reliance on the state.
As we all know, life expectancy in the UK is steadily increasing. Advances in medical care, better working conditions, health and lifestyle education and a lack of major conflicts have all played a part. A recent study by the ONS (Office of National Statistics) predicts that average life expectancy will increase by 6.2 years for men (from 79.5 to 85.7) and 4.3 years for women (from 83.3 to 87.6) by 2030.
Living longer has a knock-on effect on pensions. If we live longer, our retirement is also going to be longer, and if our retirement is longer, we’re going to need a pension for longer. Despite this, most of the population is making little, if any, provision for retirement; the constant drain on our finances throughout adult life sometimes making it a struggle just to ‘get by’, let alone put money aside for the future.
Far too many people are relying on the state to see them through retirement. Despite a change in the system (for those reaching their State Pension age after 6 April 2016), the full, ‘new’ State Pension, which rises from £168.60 to £175.20 per week in tax year 2020-21, is still generally accepted as being insufficient for most of us to live on. Not only that, a longer period of retirement means that the State Pension will have to be paid for longer, the ONS predicting that the cost of providing it will steadily rise from £94billion in 2012-13 to £167billion in 2032-33.
The Pensions Act 2008 aims to change this. From 1 October 2012, auto enrolment legislation required every employer, no matter what their size, to enrol every qualifying worker into a workplace pension scheme and then make regular contributions to the scheme.
As a process, auto enrolment started on 1 October 2012, and was phased in on a ‘workforce size’ basis over a period of five-and-a-half years, ending in February 2018. During this initial rollout, an individual employer’s legal obligations came into force on what was known as their ‘staging date’, the date being based on the number of workers in their PAYE scheme on 1 April 2012.
Since then, if you are a new employer your legal duties begin on the day your first member of staff starts work, a date known as your ‘duties start date’.
How can One Financial Solutions help you?
One Financial Solutions is here to help you. We can help you plan and implement everything necessary to ensure you comply with the new legislation and fulfil your legal obligations.
If you already have a workplace pension scheme we’ll review it to make sure it can be used and will recommend any changes that may be needed. If you need a new scheme we’ll find one for you and, as a truly independent firm of financial advisers, we’ll make sure the scheme we recommend is selected from the entire market and is the one that is best for both you and your staff.
More than that, if you’d like us to administer the entire scheme for you, we can do that too.
So, if you’re looking for specific help about auto enrolment or just want advice on the subject, please call us on 020 3714 9565 or ask us to call you by sending an email to email@example.com.