Automatic Enrolment will encourage new and Innovative pension schemes

Auto Enrolment refers to new pension legislation, which becomes law via the Pension Act 2008. This states that from October 2012, phased over 5 years, eligible employees will be automatically enrolled in their employer's workplace pension

Dorset, WI (prHWY.com) June 21, 2012 - Auto Enrolment refers to new pension legislation, which becomes law via the Pension Act 2008. This states that from October 2012, phased over 5 years, eligible employees will be automatically enrolled in their employer's workplace pension schemes without any active involvement. There will be mandatory contributions from the employer. Automatic Enrolment allows an employer to automatically deduct contributions from an employee's wages unless an employee decides to actively opt out or contribute a different amount. Any plan that allows elective salary deferrals can have this feature.

Auto Enrolment is one of the significant new duties of an employer in UK. This new law introduced by the UK government, is designed to encourage employees to save for their retirement. The auto enrollment plan helps employees save and build their retirement savings by way of contributing a portion of their wages 'before tax is deducted'. The money is then invested in the company-sponsored retirement account and allowed to grow tax-free until retirement. It is mandatory for employers to auto enroll employees who are between 22 years and state retirement age and earn at least £ 7,475 per annum. Employers can use the default government scheme, NEST (National Employment Savings Trust) or, provided the qualifying requirements are met, their own schemes or scheme.

Whilst auto enrolment focuses on the employer and duties associated with the new legislation, the new regulations also have an impact on the employees. Automatic Enrolment affects all the employees as they will each fall into one of these three categories: Eligible, Non-Eligible and entitled. As an eligible worker you will meet the criteria set by pension regulation for automatic enrolment into a workplace pension scheme. A non-eligible worker will be aged between 16 years of age and less than 75 and have qualifying earnings payable by the employer. A non-eligible worker will not be automatically enrolled into the pension scheme however, has the option to join if they so wish. The employer must also contribute the minimum level. An entitled employee is 'entitled' to join the scheme however the employer does not have to make a contribution. Each employee should be monitored to ensure that they are in the correct category and the correct procedures must be followed. All the above mentioned categories can join the pension scheme however automatic enrolment only applies to those who fulfill the eligibility criteria. Contribution requirements for Automatic enrolment depend on 'qualifying earnings' which are broadly, gross annual earnings of between £ 5035 and £ 33,540.


Auto enrolment will have an impact on any business whether it's just 1 person or 10,000. The employer duties associated with the new legislation are both complex, time consuming and costly. Auto enrolment or 'Auto Enrolling' employees into a qualifying workplace pension scheme will enable eligible workers to receive mandatory contributions based on qualifying their earnings.

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Tag Words: automatic enrolment

Categories: Business

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