Industry News - 19th April 2023
Automatic enrolment for workplace pensions has helped many employees make a start on providing for their retirement. With these pensions, there is the advantage that employers and the government are also contributing to the pension pot.
The law states that employers must automatically enrol workers into a workplace pension if they are aged between 22 and State Pension Age and earn more than the minimum earnings threshold. The minimum threshold has remained fixed at £10,000 since 6 April 2014. The employee must also work in the UK and not be a member of an existing, qualifying pension scheme. Employees can opt-out of joining the pension scheme if they wish.
Under the rules, employers are also required to offer their workers access to a workplace pension when a change in their age or earnings makes them eligible. This must be done within 6 weeks from the day they meet the criteria.
Under the automatic enrolment rules, the employer and the government also add money into the pension scheme. There are minimum contributions that must be made by employers (3%) and employees (4%). This means that contributions in total will be a minimum of 8% – the additional 1% tax relief is contributed by the government.
For more information on workplace pensions, please contact us.