An Auto Enrolment Pension Scheme:
Auto Enrolment is an obligation on all employers to enrol eligible employees in a workplace pension scheme unless they are already a member of a Qualifying Scheme.
A Qualifying Scheme is either a personal pension scheme or an occupational pension scheme which meets the charges cap of 0.75% pa for all charges (including the costs of a stated default investment fund), and into which the level of contributions are being paid.
The date from which employers will need to do this varies from employer to employer, and is called the 'staging date'. The earliest staging date was in October 2012 and employers can find out their staging date from The Pension Regulator's website.
From their 'staging date', all employers will have to auto enrol employees who are:
Employers will be able to delay Auto Enrolment of new employees for up to three months from the date they join service. This also applies to employees whose income is initially below the earnings trigger, but subsequently exceeds it.
The scheme must satisfy a minimum contribution test. The minimum required contribution is based on a band of earnings falling between £6,136 and £50,000pa in 2019/20. This will be made up of an employer’s contribution of at least 3% and a personal contribution of 5%.
Alternative minimum contribution levels apply to existing schemes where the employer uses a different definition of earnings, known as pensionable salary (rather than qualifying earnings), and these minima will be dependent on the 'tier' (or 'set') that is used.
Employers will also have an ongoing duty to maintain qualifying pension provision for employees who are already members of a Qualifying Scheme or become members of such schemes.
In addition to the traditional schemes, a number of providers have developed Qualifying Scheme solutions that are aimed at low to moderate earners and their employers. The providers offering this type of scheme are:
The value of a pension will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you initially invested.
The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances.
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