The proposals in the Government's 2006 White Paper on Personal Accounts, the aim of which is to introduce "soft compulsion" into workplace pension provision, are now coming to fruition. On 27 October 2010 the Pensions Minister, Steve Webb, confirmed that the Government would proceed with implementing the reforms set out in the Pensions Act 2008 and accompanying regulations, subject to the relatively minor changes recommended by an independent review of the proposed regime.
The reforms introduce new employer duties to auto-enrol employees and make contributions to a pension scheme on their behalf. They apply to all employers regardless of size and, in order to facilitate the requirements for those employers who do not have their own pension scheme, a new national pension scheme (the National Employment Savings Trust or NEST) has been set up
The implementation of the new regime will start in October 2012 for the largest employers with over 120,000 employees, continuing for employers of between 50,000 and 119,999 in November 2012 (although there is some flexibility for these employers to automatically enrol earlier, from July 2012, if they wish to do so). Other employers will thereafter be brought into the regime in monthly stages, in order of size (again employers may choose an earlier date subject to certain conditions), so that by October 2013 all employers with over 800 employees will need to comply, with all employers having more than 50 employees being affected by July 2014. By September 2016 every employer in the country will have been staged in. Employers now have a definitive timescale (which can be found on the table below) to work towards in terms of considering the implications of the new legislation - in particular, its potential impact on pension and wider total remuneration costs.
This website sets out the broad requirements of the new employer duties, how they might impact on employers and trustees and explains the framework within which NEST will operate.
Employers should assess their individual likely start date for compliance with the new regime and start putting together an action plan to consider the implications of the new legislation and the potential impact of the additional pension and implementation costs in their financial planning. Such advance preparation will ensure that the additional financial burden is identified well in advance and is budgeted for as appropriate.
At this stage the top priorities should be to:
- Identify the likely cost impact of the proposals (contribution and implementation)
- Consider the options available for mitigating this
The next stage should be to consider other key issues, such as whether provision should be made through your existing employer-sponsored arrangement or the NEST vehicle.
Employer (by PAYE scheme size or other description) |
Date before which notification to automatically enrol early must be sent |
Staging date |
120,000 or more |
1st September 2012 |
1st October 2012 |
50,000-119,999 |
1st October 2012 |
1st November 2012 |
30,000-49,999 |
1st December 2012 |
1st January 2013 |
20,000-29,999 |
1st January 2013 |
1st February 2013 |
10,000-19,999 |
1st February 2013 |
1st March 2013 |
6,000-9,999 |
1st March 2013 |
1st April 2013 |
4,100-5,999 |
1st April 2013 |
1st May 2013 |
4,000-4,099 |
1st May 2013 |
1st June 2013 |
3,000-3,999 |
1st June 2013 |
1st July 2013 |
2,000-2,999 |
1st July 2013 |
1st August 2013 |
1,250-1,999 |
1st August 2013 |
1st September 2013 |
800-1,249 |
1st September 2013 |
1st October 2013 |
500-799 |
1st October 2013 |
1st November 2013 |
350-499 |
1st December 2013 |
1st January 2014 |
250-349 |
1st January 2014 |
1st February 2014 |
Less than 50 with the last 2 characters in their PAYE reference numbers 92, A1-A9, AA-AZ, B1-B9, BA-BY, M1-M9, MA-MZ, Z1-Z9 or ZA-ZZ |
1st February 2014 |
1st March 2014 |
240-249 |
1st March 2014 |
1st April 2014 |
150-239 |
1st April 2014 |
1st May 2014 |
90-149 |
1st May 2014 |
1st June 2014 |
50-89 |
1st June 2014 |
1st July 2014 |
Less than 50 with the last 2 characters in their PAYE reference numbers BZ |
1st July 2014 |
1st August 2014 |
Less than 50 with the last 2 characters in their PAYE reference numbers 00-01 |
1st August 2014 |
1st September 2014 |
Less than 50 with the last 2 characters in their PAYE reference numbers 02-04 |
1st September 2014 |
1st October 2014 |
Less than 50 with the last 2 characters in their PAYE reference numbers 05-07, 0A-0Z, C1-C9, CA-CZ, D1-D9 or DA-DZ |
1st October 2014 |
1st November 2014 |
Less than 50 with the last 2 characters in their PAYE reference numbers 08-11, 1A-1Z, E1-E9 or EA-EZ |
1st December 2014 |
1st January 2015 |
Less than 50 with the last 2 characters in their PAYE reference numbers 12-15, 2A-2Z, F1-F9, FA-FZ, G1-G9 or GA-GZ |
1st January 2015 |
1st February 2015 |
Less than 50 with the last 2 characters in their PAYE reference numbers 16-20, 3A-3Z, H1-H9 or HA-HZ |
1st February 2015 |
1st March 2015 |
Less than 50 with the last 2 characters in their PAYE reference numbers I1-I9, IA-IZ |
1st March 2015 |
1st April 2015 |
Less than 50 with the last 2 characters in their PAYE reference numbers 21-25, 4A-4Z, J1-J9 or JA-JZ |
1st April 2015 |
1st May 2015 |
Less than 50 with the last 2 characters in their PAYE reference numbers 26-31, 5A-5Z, K1-K9 or KA-KZ |
1st May 2015 |
1st June 2015 |
Less than 50 with the last 2 characters in their PAYE reference numbers 32-38, 6A-6Z, L1-L9 or LA-LZ |
1st June 2015 |
1st July 2015 |
Less than 50 with the last 2 characters in their PAYE reference numbers N1-N9 or NA-NZ |
1st July 2015 |
1st August 2015 |
Less than 50 with the last 2 characters in their PAYE reference numbers 39-47, 7A-7Z, O1-O9, OA-OZ, P1-P9 or PA-PZ |
1st August 2015 |
1st September 2015 |
Less than 50 with the last 2 characters in their PAYE reference numbers 48-57, 8A-8Z, Q1-Q9, QA-QZ, R1-R9, RA-RZ, S1-S9, SA-SZ, T1-T9 or TA-TZ |
1st September 2015 |
1st October 2015 |
Less than 50 with the last 2 characters in their PAYE reference numbers 58-69, 9A-9Z, U1-U9, UA-UZ, V1-V9, VA-VZ, W1-W9, WA-WZ |
1st October 2015 |
1st November 2015 |
Less than 50 with the last 2 characters in their PAYE reference numbers 70-83, X1-X9, XA-XZ, Y1-Y9 or YA-YZ |
1st December 2015 |
1st January 2016 |
Less than 50 with the last 2 characters in their PAYE reference numbers 84-91 or 93-99 |
1st January 2016 |
1st February 2016 |
(a) Less than 50 unless otherwise described or (b) no PAYE scheme |
1st January 2016 |
1st February 2016 |
New employer (PAYE income first payable between 1st April 2012 and 31st March 2013) |
1st February 2016 |
1st March 2016 |
New employer (PAYE income first payable between 1st April 2013 and 31st December 2013) |
1st April 2016 |
1st May 2016 |
New employer (PAYE income first payable between 1st January 2014 and 30th September 2014) |
1st May 2016 |
1st June 2016 |
New employer (PAYE income first payable between 1st October 2014 and 30th June 2015) |
1st July 2016 |
1st August 2016 |
New employer (PAYE income first payable between 1st July 2015 and 31st March 2016 |
1st September 2016 |
Further details can be viewed on the pensions regulator website below.
https://www.thepensionsregulator.gov.uk/pensions-reform/detailed-guidance.aspx