The UK Pension Auto Enrolment System in Essex
In 2008 in the United Kingdom, the Pensions Act of 2008 was passed, requiring all employers, no matter what size, to participate in the funding of employee’s retirement. It is based upon a pension auto enrolment system designed to help employees accumulate funds for their retirement.
It does not matter if an employer has thousands of employees or just one, or if the employer is a pet shop, a hairdresser, a solicitor, or an retail store, all must become a part of the scheme.
Minimum contributions must be at least 2% of wages of which at least 1% has to be from employer contributions. Of course an employer can contribute more if he or she wishes, but that is nice for employees, as it gives them some extra help in this regard.
The legislation was put into effect because of the fact that people are living much longer when they get into their retirement years, and there was a general complacency about setting aside funds for the inevitable time when we have to quit working and fend for ourselves financially.
Each employer was given a staging date, beginning with April 1, 2012, for existing employers, and to be determined with each new employer who goes into business after that date.
There are certain duties which the employer must maintain in order to remain compliant, including communicating in writing to the employees just what the plan is all about, and what the level of employer contributions are going to be.
In addition, employers will have to keep track of the names of the participating employees, their contributions, as well as the employer contributions and the dates when contributions were made. The sole purpose for the record keeping is simply to track who did what when in order to avoid any misunderstanding or problems in the future.
It is a common human condition to put off until later some things that are far off, and that don’t resonate in the present scheme of things. That is exactly how many people feel about saving for their retirement. It is just so far down the road, that it can always be taken care of later, until later comes and there is still nothing in the till.
The response from the public about this pension auto enrolment system has been very favorable, and especially so from employees as part of the funding has to come from the employer, it is free money for them.
If an employer does not comply, there are penalties and fines, and a court date involvement if the non-compliance becomes serious enough. However, it is the goal of the regulators to provide enough assistance to help an employer through the bureaucracy in order to pave the way through getting things set up.
There is a very thorough and well thought out set of steps and directions available on the government website that pertains to this issue, so if an employer has any questions at all, there are numerous examples that can be found there to help an employer through the process.
For more information on workplace pensions and payroll in Essex, get in touch with a professional accountant.
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