Automatic pension enrolment timetable

It will now be October 2018 before minimum employer contributions to workplace pensions are fully phased in. Previously, this was supposed to happen by October 2017 – and before that by 2016, and before that by 2015.

The government says it is taking things more slowly because economic conditions have made contributions less affordable.

Nonetheless, the Department for Work and Pensions (DWP) insists it will adhere to the latest timetable regardless of whether the economy improves.

Employer obligations

Under the new laws, employees will be automatically enrolled into a pension scheme with employer contributions if they are aged between 22 and the state pension age, earn at least £8,105 a year, and are not already in a scheme that meets minimum standards.

Once enrolled, employees can opt out. But saving in a pension will be the new default setting for anyone who does not express a choice.

Eventually, the automatic level of contributions must be at least 8% of the individual’s “qualifying earnings”. This includes 3% that must come from the employer.

Big employers first

If you are not already in a workplace pension scheme, when you will be enrolled depends on how many people are in your employer’s Pay-As-You-Earn tax arrangement.

The automatic enrolment regime applies to the very largest employers from
October 2012.

Progressively smaller employers will then be brought on board month by month until February 2014, when all employers with 250 or more staff will be within scope. Firms with 250 to 2,999 people on the payroll will not now get extra breathing space, as had been hinted in November.

Employers with between 50 and 249 staff will have compliance dates ranging from April 2014 to April 2015.

For firms with fewer than 50 employees, these deadlines fall between June 2015 and April 2017, unless whoever wins the intervening general election offers them a further reprieve.

From these dates, employers will generally be able to defer automatically enrolling eligible staff for up to three months. That is also the maximum deferral period that can be applied when someone new joins, or when an existing employee turns 22 or starts earning more than £8,105.

Auto-enrolment criteria

  • Most workers will be enrolled if they are aged between 22 and the state pension age
  • However, these workers must be earning at least £8,105 a year
  • They will not be enrolled if they are already in a pension scheme that meets minimum standards
  • They can opt out