What is Auto Enrolment?

Millions of people are not saving enough to maintain their standard of living in retirement. Life expectancy has increased significantly, whilst at the same time levels of pension savings have fallen.

To address these issues, the Pensions Act 2008 introduced fundamental reforms of workplace savings in the UK, with the requirement for every employer to automatically enrol their workers into a qualifying pension scheme and to contribute to that pension. Much of the cost and administrative burden of auto-enrolment will fall on employers.

This means that employers will ultimately have a legal requirement to contribute at least 3 % of workers' qualifying earnings*, although they can choose to pay more if they wish. The worker will be responsible for paying the balance to take employees total annual pension pot up to 8% of qualifying earnings.

There are some exemptions and the timescales will vary according to the size of firms. The following pages are a guide to help you understand what the implications are for your firm and your employees.

In summary, from October 2012, employers will be required by law to:

• Automatically enrol all eligible employees not already in a good quality pension scheme, into a Qualifying Workplace Pension Scheme (QWPS) within 3 months of becoming eligible

• Pay contributions for every employee who does not opt-out of the QWPS