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Summary
- Employers will have a legal obligation automatically to enrol eligible job holders into a workplace pension. Employers can either use NEST (the National Employment Savings Trust), the government's workplace pension scheme or their own existing pension schemes provided they meet certain minimum requirements.
- Unlike the current rules for stakeholder pensions, employers will be legally obliged to contribute to the scheme if the employee does not opt out.
- Individuals between age 22 and State pension age will only be auto-enrolled once they reach the income tax threshold (£7,475 in 2011). For employees who are auto-enrolled, contributions will be based on earnings in excess of the NIC earnings threshold.
- Employers will be able to operate a 3-month waiting period after employees start work before having to auto-enrol them. This will ensure that employees with short service (e.g. seasonal workers) do not have to be auto-enrolled. Employees will be able to 'opt in' during this period.
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