Pensions Know Your Obligations at Recruitment Stage

Pensions Know Your Obligations at Recruitment Stage Pensions: Know Your Obligations at Recruitment Stage 3 Sep 2015       Our guest blogger Claire Nisbet is a Senior Solicitor in the Employment and Pensions team at Maclay MurraySpens LLP. Whilst advising employers and employees on a wide range of employment issues, Claire specialises in advising clients on contentious employment, discrimination and equal pay matters. Claire is the Treasurer of the Scottish Discrimination Law Association, a Committee Member of Scottish Women in Business and a Board Member of Graphic Enterprise Scotland, the Trade Association for Print Employers in Scotland. Since April 2015 Claire has acted as Assistant Editor and Research Assistant on the 3rd Edition of Employment Tribunal Practice in Scotland (Simon and Taggart), the only distinctly Scottish reference work of its kind.     Pensions: Know Your Obligations at Recruitment Stage As staging dates for auto enrolment pick up pace all employers, regardless of size, need to be mindful of pension obligations when recruiting new employees. Larger employers reached their staging dates first and were assigned staging dates running from 1 April 2014 to 1 April 2015. Employers with fewer than 50 workers have been given staging dates between 1 June 2015 and 1 April 2017. New businesses have staging dates at the end of the overall timetable. You are well advised to be aware of your staging date at least twelve months in advance of it. You can find out your staging date here if you do not already know it: Know Your Staging Date   Once you have ascertained your staging date you should think about whether your current occupational scheme (if you have one or are planning on setting one up) will meet the requirements for auto enrolment. Whether or not you have a defined benefit scheme, a defined contribution scheme or a hybrid scheme will be important at this stage as each will have different requirements.   If you do not currently have a scheme or your scheme does not meet the requirements you can enrol jobholders in NEST, the central government-established scheme. NEST has a public service obligation, meaning it must accept all employers who apply.   There are also other master pension trusts which allow non-linked employers to join.   Who is eligible for auto enrolment? Workers who qualify as “job holders”. This category includes permanent and temporary employees and agency workers between the ages of 22 and state pension age and who earn at least £10,000 a year (in the 2015/16 tax year).   Can employers postpone auto-enrolment? If a jobholder is eligible for auto-enrolment an employer must auto-enrol him or her within a period of six weeks starting on the jobholder's auto-enrolment date (that is, the employer's staging date or the first date on which the jobholder meets the eligibility criteria if that is later).You can choose to use a three-month postponement period before a jobholder is enrolled.   What are the minimum contribution requirements? These are being phased in over six years. Currently (2015/16) the statutory minimum contribution for an employer is 1% of a jobholder's qualifying earnings, on the basis that the jobholder also pays 1%. The employer can, however, pay the entire minimum 2% contributions if it chooses. Ultimately however employers will be obliged to pay minimum contributions of 3% of a jobholder's earnings each year, with combined contributions due (from employers and jobholders, including tax relief) of 8% of earnings. In most cases, therefore, jobholders will be expected to pay the balance of 5% contributions, though it is possible for the employer to pay the entire 8% if it chooses.   What do I need to tell employees/ new recruits? You must provide certain required information to jobholders (and other workers) about auto-enrolment, including details of the contributions they will receive, and make, and information about the right to opt out.   Opt out? Jobholders who have been automatically enrolled have a statutory right to opt out of whichever scheme they have joined by giving notice within one month of joining. Jobholders who have opted out will be automatically re-enrolled every three years during a six-month window.   For advice or more information around any of the issues discussed please email claire.nisbet@mms.co.uk