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Auto-enrolment Pensions Introduced for small and medium sized businesses

The government introduced three employment law changes on the 1st October that will have an impact on employees’ working lives. The first two probably apply to a smaller portion of the workplace as the law allowing shareholders to vote on executive pay will only affect workers with shares, and taking away the third party harassment law that made companies liable if a client or supplier harassed an employee has more impact on the business than its workers. The other law that came into effect on 1st October was the introduction of the pension schemes auto-enrolment for businesses with 800 to 1,249 employees.

According to the National Employment Savings Trust (Nest) only 9% of workers are opting out of the scheme after auto-enrolment, which has to be good news for the government as politicians had expected as many as a third of all workers to opt out. Statistics from the Department for Work and Pensions show that 1.6 million workers have stuck with their pensions after auto-enrolment following the first year of the initiative.

The Chief Exec of Nest, Tim Jones, said that “Auto-enrolment has brought a radical change to workplace pensions, but it will rapidly become the new normal. While the early stages have primarily affected large employers, the numbers of employers coming under the duties increase dramatically in the next few months. We all have to up the pace to be prepared for much higher volumes and to meet the challenges implementing automatic enrolment brings.”

Firms with between 500 and 799 members of staff will join the scheme in November. They will be followed in January 2014 by companies with 350 to 499 workers. February 2014 sees the scheme rolled out to companies with 250 to 349 workers and smaller firms will have to introduce the scheme at a later date. Whichever size firm you work for, Nest are suggesting that employees get advice from their HR departments ahead of the scheme’s introduction rather than make assumptions about auto-enrolment and pensions in general.

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