What is automatic enrolment?
The Pensions Act 2008 stipulates that every UK employer must put certain staff into a workplace pension scheme and pay contributions into it. This is known as ‘automatic enrolment’.
The Pensions Regulator ensures that employers comply with workplace pension scheme legislation so speak to your accountant or a financial adviser for pensions advice. Whatever the nature of your business, you have legal duties as an employer from the day when your first staff member comes on board.
You need to ascertain if you have staff who qualify for a workplace pension scheme and one of your duties is declaring online that you have undertaken steps for automatic enrolment.
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The Pensions Regulator has advice for businesses: https://www.thepensionsregulator.gov.uk/en/employers/setting-up-a-business-what-to-do-for-automatic-enrolment.
Automatic enrolment: a success story
A new study has shown that the automatic enrolment policy has revolutionised Britain’s savings habits. The Institute for Fiscal Studies (IFS) discovered that the major reform brought nearly half of the workforce of the country’s small businesses into workplace pensions, increasing rates of participation by 44%.
The statistics shine a spotlight on how automatic enrolment is bettering the financial prospects of millions of employees in the private sector, among whom over a quarter work for a small business.
Prior to the introduction of automatic enrolment in 2012, less than 1 in 6 of those workers were putting away money for retirement; that figure has now attained 7 in 10. The IFS study proposes that only 26% of small business employees would be saving into a workplace pension today had automatic enrolment not been introduced.
The IFS research also demonstrated that 91% of private-sector workers are employed by an employer offering a workplace pension.
The government remarks that automatic enrolment is a remarkable success, revolutionising pension saving and already boosting the retirement prospects of over 10 million employees.
As the IFS report shows, UK small business owners are behind the scheme’s growth, with participants increasing from 26% to 70%.
This government stays committed to ensuring that small businesses throughout the UK can grow and thrive. Official research demonstrates that 70% of micro and small employers felt that the ongoing workplace pension scheme administration was easy to manage.