Under the auto-enrolment scheme for pensions, employers are required to enrol automatically all eligible workers into a workplace pension scheme and pay a minimum contribution. Employees do have the right to opt out.
At present, employees between the ages of twenty-two and state-pension age, and earning £10k per year or more, are eligible for auto-enrolment. The government plans to reduce the lower age limit to eighteen during 2020, in order to help younger employees to save for their future. This would allow a further nine hundred thousand young people to save an additional £800 million through the workplace pension scheme.
To make compliance easier, the government is exploring opportunities to work with companies who act as ‘touch points’ for the 4.8 million self-employed, such as banks and those who contract labour – to explore how technology can be used to increase their pension savings.
However, concerns remain about the impact of these changes to employers, with Mike Cherry, National Chairman of the Federation of Small Businesses (FSB), stating, “… by 2019, hundreds of thousands of small employers will have to pay up to £180 more per employee each year. For employers in certain sectors, such as care and hospitality where margins are tight, this will really add up”.
More information in regards to this important topic can be found on GOV.UK. Alternatively, contact us for more guidance.