In 2008 in the UK the law concerning workplace pensions was altered and the Pensions Act of 2008 came into being. This started the UK Auto Enrolment Pension Scheme which all employers must become compliant.
Every employer in the UK, regardless of their size must participate in the scheme as the law requires. Even if you are a hairdresser, a butcher, a draftsman or a barber, if you even employ only one person, you must comply with the law.
It is now required that all employers must contribute to the pension scheme called the automatic enrollment scheme, and the employees will also contribute. The UK auto enrollment pension arrangement calls for a minimum payment of 2% of wages, with the employer contributing at least 1% of that amount.
It is important that the employer understand the law, what the duties of the employer are, and that he or she be compliant in regard to all the duties that are involved in the operation of the plan. It is also a good choice to find an accountant in London who can inform you of the auto enrolment effects and also give you advice on saving and financing.
Each employer has a staging date, which originally was April 1 of 2012 for the then current employers. If an employer is a new employer, then a staging date will be assigned along with a PAYE reference number, which will be used by the employer for identification purposes in the plan.
If the employer uses an automatic pay system to pay employees, the money that is withheld from the employee’s pay will be due on the 22nd of the following month, or if payment is to be made by cheque, it will be due on the 19th of the following month.
The purpose of the UK auto enrolment pension system is to help employees plan ahead for their retirement future. It was discerned that not enough people were really planning ahead and preparing for the inevitable time when they would have to stop working. That being the case, it was also evident that people on the whole would not have enough set aside for that moment.
Thus the action for this legislative effort to have society in general use the mechanism of an employer-based system to accomplish the task. In all, the response from both employers and employees has been positive. It is good incentive for employees, because part of the money that is set aside is going to come from their employer, which gives them quite a nice return on their money.
If an employer, for some reason, does not comply with the act, he or she can be subject to fines, penalties and ultimate court action, if it gets serious enough. Employers on the whole do wish to comply, and it is usually out of misunderstanding and confusion that there is ever a problem.
There is ample guidance that is given from the online website from the government on all of the required procedures, as well as a way to contact someone if you need assistance or have questions.
All of the necessary information is very straight-forward, which makes it easier to comply and be sure that the plan is established properly.