Businesses are adapting to new workplace pensions laws that introduce automatic enrolment into compulsory pension provision. For many smaller pharmacies, this will be their first experience of pension schemes, which can seem complicated and expensive. What are the obligations now faced by employers and what are the options involved in complying with them?

Q What do employers have to do?

A In 2012 the government introduced a law requiring employers to enrol workers into a pension scheme and to make contributions to that scheme on the worker’s behalf. The employer’s contribution, which starts at one per cent of the worker’s salary, will increase over time to three per cent by 2018.

 

Q When do they have to do it by?

A Large companies are already required to comply, and the law is gradually being rolled out for smaller employers according to their size, with the smallest having to comply in 2018. Companies can find out their auto-enrolment date by visiting www.thepensionsregulator.gov.uk/ employers/tools/staging-date.aspx

 

Q Who does it concern?

A Full-time and part-time UK workers are eligible if they:

  • Are between 22 and 65
  • Earn £10,000+ a year (tax year 2014-15), and
  • Are not already in a suitable pension scheme. Employees can opt out of membership of the scheme at any time, although employers must re-assess and if necessary re-enrol any such workers every three years

 

Q What if an employer fails to comply?

A Employers face penalties ranging from warnings from the Pensions Regulator to daily fines of up to £10,000. There are a number of areas of potential danger. For example an employer must be very careful not to take any action that encourages a worker to opt out, and must provide information to its workforce at certain stages.

 

Q How can employers comply?

A Larger employers may already operate pension schemes that they are now using for auto- enrolment purposes. For smaller employers, the government’s NEST scheme is a popular choice. Careful planning around auto-enrolment is essential.

 

The above is a general overview and we recommend that independent legal advice is sought for your specific concerns.

Andrew Benson is an associate in the pensions team at Charles Russell LLP, andrew.benson@charlesrussell.co.uk

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