This is an update for employers. Last week the Department for Works and Pensions confirmed a number of important points
1 Despite the change in Government – NEST will still be introduced in October 2012
2 Only employees earning more than £7,475 (this is an increase of £2,000 over the previous proposal) will be automatically enrolled into a pension scheme from 2012
3 An optional waiting period of three months has also been introduced, during which employees can voluntarily opt-in
4 Self-certification for employers operating money-purchase schemes has been simplified
5 The minimum contribution rates would remain the same. The previous Government proposed 3% from the employer, 4% from the employee, and 1% tax relief. The minimum contributions will be phased in. From October 2012 to September 2016 the total contribution (including tax relief) will be 2% with a minimum of 1% coming from the employer. In the year following the end of staging: (October 2016 to September 2017) the total contribution (including tax relief) will be 5% with a minimum of 2% from the employer rising to the full contributions from October 2017
6 Auto-enrolment will come into force on 1 October 2012 with employers phased in gradually over the following four years depending on size (If you look on the back of the newsletter you should be able to work out when your company will be affected.) Only businesses with 120,000 or more employees will have to comply with the reforms at the start date
ACTION
Nicholls Stevens will be visiting employers to update advice and holding a number of update seminars in the next few months
Carole Nicholls November 2011