Auto Enrolment Pension Inquiry Too Late

Auto Enrolment Pension Inquiry Too Late.

Automatic enrolment is the requirement of employers to offer workplace pension schemes where they have two or more qualifying employees. Qualifying employees are automatically enrolled into the pension scheme with minimum contributions as small percentages of qualifying earnings paid by both the employer and employee. These minimum contributions will increase over the next few years to reach a point where 8% of qualifying earnings will be paid into your pension scheme.

Employees do have the right to opt out i.e. not join the pension scheme.

This week, the Work and Pensions Committee (a cross-party committee of MPs) has launched an enquiry into the effect of auto enrolment on small and very small (micro) employers.

The inquiry is open now and closes in February 2016.

The cross-party committee is looking for evidence on:

• How effective auto enrolment has been
• The cost impact on both employers and employees including the current earnings thresholds and contribution rates
• The administration burden on employers
• How auto enrolment will impact on retirement options as well as the new flat rate state pension
• The effect of delaying increases in contributions from October 2017 until April 2018 for the increase to 5% of qualifying earnings funded by employee and employee contributions and the increase of now 8% of qualifying earnings from October 2018 until April 2019

Comment

Given that the starting dates for auto enrolment for virtually all small employers start in 2016, we suggest the Work and Pensions Committee have left this way too late. This is a serious matter where to date only medium and larger employers have had to comply with auto enrolment regulations but now literally hundreds of thousands of small businesses will need to comply in the next few months.