New Pension Scheme Proposals
The Government has announced plans to introduce an auto enrol pension scheme for all employees earning above £7,500 a year. Starting in October 2012 for the larger employers the scheme will be phased in over the next four years so that all employers should have implemented it by 2016.
It will mean all employers will have to offer staff a Company Scheme or use the Government's new National Employment Savings Trust (NEST).
Payments will come from earnings over the threshold for paying national insurance. The starting level will be 1% of pay from both the employer and employee. In October 2016 that minimum contribution will rise to 3% from the employee and 2% from the employer then in October 2017 5% from the employee and 3% from the employer.
Employers will be able to offer their own company pensions or they can pay into an existing stakeholder pension, or group personal pension or they can opt for the NEST pension provided in each case they are at least as generous as the minimum standards.
It will not be compulsory for employees earning below the £7,500 threshold to enrol in the NEST scheme but those on a percentage earnings band between £5,000 and £7,500 will be allowed to opt in.
Where staff are employed on a temporary basis for less than twelve weeks an exception will be made and they will not have to be bought into the scheme.
This article was added on 21-01-2011
