Workplace Pensions

An Introduction to Workplace Pensions.

Maxim Financial Services provide a cost effective service to employers to ensure you meet all the requirements when setting up a Workplace Pension Scheme.

Workplace Pension Reform is to encourage more people to save for their retirement.  As an employer, you are likely to be affected by the reforms.

What are the Employer Pension Changes?

You must provide a Workplace Pension Scheme for certain members of your workforce from 2012 and as an employer you will need to make a contribution towards it.  Even if you already offer pension arrangements for your employees, you will still have some new obligations to meet.

The pension scheme that you provide must meet a number of conditions based on the level of contributions paid or the benefits received.

Membership of the scheme must be automatic for certain workers, known eligible jobholders.  An eligible jobholder are workers who earn more than minimum earnings, are aged between 22 and state pension age and work in the UK.  Because these people will not have to do anything to join the scheme, the process is known as automatic enrolment.  Most of your workers are likely to be included in the automatic enrolment process.  They can choose not be in the scheme if they want to, by actively opting out.

If you already have a company pension scheme, you may be able to use it if it meets certain qualifying conditions.

When will automatic enrolment come into effect?

Each employer will be given a date from which the changes will have to be in place.  This is known as your staging date.

• The first staging dates will be in October 2012 and will continue through to 2016.
• Your staging date will be broadly based on the number of people you have in your PAYE Scheme.
• Employers with the largest number of workers will have the earliest staging dates.
• The smallest employers will have later staging dates from 2014.
• The Pension Regulator will contact you between 6 to 12 months before your staging date.

What will I have to do?

The main things you must do are:

• Provide a qualifying workplace pension scheme.
• Automatically enrol all eligible jobholders into the workplace pension scheme.
• Pay employer contributions for eligible jobholders to the workplace pension scheme.
• Tell all eligible jobholders that:
  - They have been automatically enrolled &
  - They have the right to opt out if they want.
• Register with The Pension Regulator and give us details of your qualifying workplace pension scheme and the number of people that you have automatically enrolled.

You must not-

• Encourage your workers to opt out of the qualifying pension scheme.
• Have recruitment practices that will benefit job applicants who indicate they are prepared to opt out.
• Treat workers unfairly or put them at a disadvantage because of automatic enrolment.

As an employer – What contributions will I have to make?

You must contribute at least 3% of your worker’s earnings, although you can choose to pay more if you wish.  The worker will be responsible for paying the rest.  They will get tax relief on their contributions.

What if I have an existing pension scheme?

Even if you already provide a pension scheme for your workers, you will need to check if it is a qualifying scheme.

It will need to meet certain requirements depending on the type of scheme you have.  It must also be appropriate for automatic enrolment.

You should review your existing scheme and discuss the rules and possible changes with your trustees or pension provider.

How will I know if my scheme is a qualifying scheme?

Many occupational and group personal pension schemes will qualify.  To be a qualifying scheme, it needs to meet certain requirements.

To be a qualifying scheme, minimum contributions must be made or it must provide a minimum rate at which benefits will build up.  Even if it doesn’t qualify at the moment, you may be able to change he scheme rules or amend the terms of the policy so that you will be able to use it by the time your staging comes round.

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