Automatic Enrolment Rules Amended

Automatic Enrolment Rules Amended.

Revised rules have now been published concerning employers automatically enrolling employees into work place pensions.

Workplace pensions requiring employers to automatically enrol employees in have been around for a couple of years now with the rules now starting to affect small companies this year.

One major problem was for those employees who have larger pension funds and applied for protection against changes in the Lifetime Allowance (LTA).

The LTA is the maximum you can accrue in pension rights throughout your lifetime.  At one point this was at £1.8m and has been reducing over the years.  In 2016, the LTA reduced from £1.25 down to £1m.

This means that people who have pension rights in excess of this will face huge tax charges unless decided to apply for special Fixed Protection meaning that they could keep the previously higher lifetime allowance limit.

One of the conditions of keeping a Fixed Protection Lifetime Allowance was that you cannot accrue any further pension rights i.e. you and your employer must stop paying into a pension scheme on your behalf.  If any new benefits do accrue, you will automatically lose your protected Lifetime Allowance and then face huge tax penalties.

Why the fuss about automatic enrolment in Workplace pensions?

Exactly that!  The rules required employees to automatically enrol employees into workplace pension schemes.  What if you do not want join?  What if by be automatically enrolled you lose your protection Fixed Protection Lifetime Allowance?

The New Rules

The new rules as published in the Occupational and Personal Pension Schemes (Automatic Enrolment) (Amendment) Regulations 2017/79 now allow employers to not be forced to automatically enrol employees in pension schemes that have Fixed Protection.