Head of Healthcare Leah Groves has an in-depth understanding of the niche professional and commercial requirements of dentists, having acted for them for over 13 years. Here Leah gives us the lowdown on Pension Automatic Enrolment….
What is Pension Auto Enrolment?
Under the Pensions Act 2008, every employer in the UK must enrol specific staff into a pension scheme and contribute towards it. The workplace pension is designed to provide employees with savings for their retirement via mandatory work based pension schemes arranged by their employer.
It is important to be aware that it doesn’t just apply to businesses; if you employ someone directly to work for you, for example a cleaner, nanny or personal care assistant, then you are an employer and will need to ensure that any eligible employees are enrolled into a workplace pension. Conversely, if you have used an agency to hire the person and the agency pays their National Insurance contributions, the agency is the employer and you don’t need to do anything.
When does this come into effect?
The automatic enrolment process started in October 2012, with all employers being obliged to offer a workplace pension scheme by a specific mandatory enrolment date. These staging dates have been staggered for different size employers, with the largest companies (those with over 120,000 employees) being required to comply from 1st October 2012 to new employers (where income is first payable between 1st July 2017 and 30th September 2017) being required to comply by 1st February 2018.
The Pensions Regulator (a public body set up by the UK Government to regulate work-based pensions) will be communicating with all employers to let them know when their legal duties start. In the meantime, please click here to go to the Pensions Regulator website to check the exact staging date for your business. The Pensions Regulator is a public body set up by the UK Government to regulate work-based pensions.
Please note that it is important that employers comply with the regulations by their set staging date to avoid receiving a fine for non-compliance.
Who qualifies?
The automatic enrolment only applies to the following employees:
• Aged between 22 and State Pension age;
• Earning at least £10,000.00 per year; and
• Who work within the UK.
Employers cannot deny staff who are ineligible under the above criteria if they wish to be enrolled. Where an employee earns less than either £112 per week, £448 per 4 weeks or £486 per month employers are not required by law to contribute to their workplace pension.
How much must each party contribute?
The Government have set minimum levels of contributions that must be paid to the pension scheme by employer and/or employee. Like the enrolment date, there is a staggered scale setting out the minimum contribution which continue to increase each year until April 2019:
• For an employer, this begins at 1% of an employee’s qualifying earnings rising to 3% by April 2019, and
• For an employee, this begins at 0.8% of an employee’s qualifying earnings rising to 4% by April 2019.
The exact dates for the increase are subject to Government approval and therefore may change.
The Government will also pay into the pension pot by giving tax relief on the employee’s contributions. If the employee is a higher-rate taxpayer, he/she can receive further tax relief on contributions, but this needs to be actively claimed through your tax return.
Further information on pension automatic enrolment can be found on the Government website by clicking here.
Specialist and experienced dental professionals are instrumental in ensuring that you run a successful business. Our specialist team takes a commercial and pro-active approach to their work to ensure that transactions are finalised as quickly and seamlessly as possible.
To get in touch, please contact Leah at [email protected] or on 01245 457 092.