Pensions Matters November 2011

Automatic enrolment - A strong prescription for the UK’s ailing retirement savings

Reforms coming into force next year mean that, for the first time, all employers will be obliged to offer and contribute to a pension for the majority of their workers. These reforms are being introduced in response to studies showing that the UK workforce is not saving enough for retirement to maintain the current standard of living for pensioners.

The Government’s chosen option to address this savings gap is automatic enrolment (“auto-enrolment”), where all employees will be enrolled automatically into a pension scheme, and will have to expressly opt out if they do not wish to participate. Currently, any inertia on the part of employees results in their not participating in pension schemes which employers may offer. Auto-enrolment deliberately turns this situation on its head as workers who do nothing will be enrolled in pension scheme membership unless and until they actively opt out.

The express intention to target individuals who have not traditionally had access to work-based pension savings, means that there are very few exemptions to this employer obligation.

These reforms will be introduced in stages starting in October 2012. Therefore now is the time for employers of all sizes to prepare for their new obligations and ensure they have systems in place ready for “auto-enrolment”.

The Pensions Regulator has issued a (somewhat daunting) set of nine detailed guidance papers. While employers will need to read these to understand the reforms fully, and consider the implications for their organisation, the FAQs in this edition of Pensions Matters summarise the issues which are likely to be most important for employers to consider at this stage.

To view the newsletter and FAQs in full please download the PDF above.  If you wish to receive regular updates on pension or employment related issues please e-mail your details to alan.french@cobbetts.com

The content of this newsletter is for information only and should not be relied upon as a substitute for legal advice.  Copyright 2011 Cobbetts - All rights reserved - November 2011