The Government is getting very serious about making people save for their retirement. Among the points that stood out:-
- Employers must enrol all their employees (with very few exceptions) into a pension scheme
- There are 43 different dates at which this can take effect for individual employers. Big companies start in October 2012 & all employers are in the boat by October 2016.
- Contributions are 8% of pay, of which 3% comes from the employer.
- Employees can opt out, but doing so is difficult and bureaucratic, and only lasts for 3 years. Then they are automatically re-enrolled.
- The administration and compliance burden falls on the employer.
- Penalties for non-compliance are draconian. Up to £10,000 per day!! Beyond that, even prison sentences are possible.
- Penalties also apply to advisers. For a recruitment agency or financial adviser to make a statement like:- 'You could employ two part timers rather than one full timer and save the need to enrol them in the pension scheme', would be illegal and subject them to penalties. So much for freedom of speech!
Thanks again to Neil Mutton at Q&A People Matter