Paying for the future
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For the first time, firms are being obliged by law to make a contribution to their employees’ pension pots
Words: Helen Watson From next year employers must automatically enrol their employees into a pension scheme. They can either use their own qualifying scheme or a government established scheme, National Employment Savings Trust (NEST). They will also be obliged to contribute on behalf of their employees. Small irms will not be forced to participate until 2015.
Phased contributions
Ultimately, employers will be obliged to contribute at least 3% of the employee’s earnings.
Total contributions paid by the employee and the employer must be at least 8% of the employee’s earnings.
Mandatory employer contributions will be phased in over six years. Broadly, employers will be required to pay contributions of 1% of an employee’s earnings in the irst four years, rising to 2% in the ifth year and the full 3% from the sixth year.
Small firms concession
Pensions minister Steve Webb has announced that irms with fewer than 50 employees will be given more time before they must start enrolling staff into such schemes.
The deadline for small irms, originally April 2014, has been extended to May 2015.
The aim is to help the smaller irms save money and to give those employers additional time to impose the compulsory scheme.
Up to nine millin employees will be affected by automatic enrolment. ■