Workplace Pensions Print
Since October 2012 “eligible jobholders” have been automatically enrolled into national pension savings schemes called Workplace Pensions. The National Employment Savings Trust (“NEST”) is probably the best known although other insurers are also offering workplace pensions. Individuals will have the chance to opt out if a workplace pension is not suitable for them.
Eligible jobholders are those earning over £10,000 aged between 22 and the State pension age and work or ordinarily work in Great Britain.
Employers must either enrol employees into a Workplace Pension Scheme, or put them into the company’s existing pension plan, provided that the plan is as good as a Workplace Pension.
As part of the process, members of pension plans who do not choose an investment fund for their Workplace Pension will have their pension monies invested in a default fund.
For 2021/22 the contributions will be up to 8% of qualifying earnings between £6,240 and £50,270, made up as follows:
- 5% payable by the employee (4% paid net of basic rate tax)
- 3% payable by the employer
Existing pension schemes may be exempt and can be certified if they offer a lower percentage of total salary but where these amounts are equal to, or greater than, the percentage of band earnings outlined above.
Depending upon the number of employees, companies will need to have a scheme in place by their “staging date”.
There will be significant penalties for employers who breach these regulations.