The Pensions Act 2008 (the Act) has introduced a new pension scheme structure for the UK, which will come into force on 1 October 2012. Whilst this may seem a long time away, the broad provisions of the new pensions scheme will apply to every employer in the country. It is recommended that each employer takes steps now to ensure they can comply with the Act when it comes into force.

The main changes introduced by the Act are: 

1. Auto-enrolment:

• An employer must auto-enrol every Eligible Employee into a Qualifying Workplace Pension within 7 days of the Eligible Employee starting work; just offering access to a pension scheme is not enough. 
• Eligible Employee: An employee will be an Eligible Employee if they are aged over 22 years old and earn over £5,035 but less than £33,540 per annum. This includes all employees, workers, agency workers and other temporary workers. 
• Qualifying Workplace Pension: This is defined as a pension scheme where the employer must pay at least 3% compulsory contributions and the total contributions paid are at least 8% per annum. If you offer a pension scheme, you should check whether this scheme is a Qualifying Workplace Pension. 

2. Opt-out:

• The Eligible Employee can choose to opt-out of the scheme after auto-enrolment. Employers are prohibited from seeking to exclude or restrict the right to auto-enrolment, or from inducing an Eligible Employee to opt-out.

3. Failure to comply:

• The Pensions Regulator can issue improvement notices, compliance notices, contribution notices and financial penalties, including fines. 

What do employers need to do?

If you employ Eligible Employees, you will need to do the following:

1. Select an auto-enrolment scheme 
2. Provide information to the scheme and to your Eligible Employees 
3. Automatically enrol Eligible Employees in the scheme 
4. Pay contributions and collect the contributions of the Eligible Employees 
5. Process opt-outs 
6. Refund the contributions of opt-outs

In preparation for the new pensions scheme, we recommend that employers take action now to prepare for these changes and to put procedures in place to ensure compliance.

Valiant Financial Consultants Ltd is offering a no cost and no obligation initial consultation to advise employers about the requirements of the new Act and the effect the new scheme may have upon their business.

If you would like to arrange an appointment with Valiant Financial Consultants Ltd, please contact Sue Gower on 01689 884510 or email sue.gower@valiant-ifa.co.uk