Pensions in the UK are changing and starting in 2012, your employer has been required to take certain steps to ensure you have a workplace pensions plan in place and up and running before the end of the year. While you have your part to play as well, many people are confused as to just what is required of the employer. Here is a short guide that explains some of this confusing, yet well intentioned retirement scheme for the future of the UK, you, and your family.
Workplace Retirement is now Automatic
There may be different names to call it, but the bottom line is that your employer must now help you save for retirement. Without you having to lift a finger, your employer must now take a percentage of your pay and place it into a retirement fund. This is money that you will never see but may miss. It is a necessary evil, however, if you are to plan for your retirement.
Smart Scheme Also Known as Sacrifice Scheme
Your employer may ask you to use what is known as a Smart Scheme or Salary Sacrifice scheme. In this type of scheme, part of your salary is “sacrificed” and your employer will place this directly into your pension plan for you along with the employer’s share (the sum paid in is determined by the particular scheme in use). By utilizing this type of scheme, you build your equity in the fund faster, will see more benefit upon leaving or retirement, and pay less tax. Your employer will also pay less tax if you opt to do this.
Criteria for Workplace Retirement Scheme
By enrolling in the pension scheme that the employer must at least offer you (by law) your retirement plan is paid by both parties… you, your employer, and in some schemes, the government. You are automatically enrolled by the employer if you meet the following criteria.
? Are between the ages of 22 years and retirement age
? The UK is where you work full time
? Your wages meet or exceed £9,440 per year
You Can Join Anytime you Choose
If you are not in the criteria group, your employer cannot turn you down if you wish to join. You also are free from the burden of contributing yourself as long as you make less than the following.
? £446 every four weeks
? £109 every week (A full seven day period)
? £473 per calendar month
Rules Your Employer Must Abide By
By law, as long as you are enrolled in the retirement scheme, your employer must also adhere to the following.
? Pay on time, the minimum due (at least)
? Allow you a one month opt out option, returning all of your contributions if you decide it is not for you
? Provide the opportunity to rejoin once per calendar year (If you voluntarily opted out within the first 30 days)
? Re-enrol you automatically after three years provided you still meet the age and pay criteria
What Your Employer Cannot Do
Due to the nature of the retirement scheme, the government realizes that not all employers are cut from the same honest cloth. Therefore, there are some things that the employer is forbidden to do by law. The following applies… Your employer cannot…
? Threaten or coerce you to opt out
? Discriminate against you for remaining in the retirement scheme, including unfair dismissal without proof of unrelated cause (beyond a reasonable doubt)
? Make any implications or persuasive remarks about a betterment of position if opt out is taken
? Shut down one scheme and then fail to enrol everyone into a new one automatically
The Pensions Regulator Is There For the Employee
Understanding how discrimination and strong arm employment works, the government has set up an anonymous Pensions Regulator position for you to turn to in times of duress that is levied against you by an employer. The Reg-u-la-tor does not wear a leather jacket, sunglasses and say things like, “I’ll Be Back.” However, you will not be left alone or thrown to the wolves (although he or she may drive a motorcycle). In fact, whenever your employer auto-enrols you in a pension scheme they must inform you of the following in writing.
? Enrolment date
? Type of scheme and its management names and contact information (who runs it)
? A detailed contribution account for both them and you
? Detailed information on how you may opt out if you should desire to do so without sugar coating the opt out or making it appear more desirable than the actual wording
Your Employer Has Options to Buy Time to Better Prepare
There are things that an employer can do to try to strengthen their position and better prepare for the pension scheme. The following is allowed by law, presented along with the exceptions to the rules that apply to you.
The employer may…
? Delay the pension scheme auto-enrolment by as long as three months
? Choose a hybrid: a defined” pension scheme which would allow them to delay or postpone auto-enrolment for even longer, specified by policy length of time
However, in doing so, they must follow a specific procedure or face government prosecution. The employer must…
? Inform you of the delay in writing, including the length of the delay and reason for the delay
? Immediately and without delay allow you to join the pension scheme if you request to do so
If you have any questions or concerns regarding the new pension scheme or if you feel you have been discriminated against by your employer, please contact the following agencies: