Update on Automatic Enrolment

More than one million employers have now put around 9.3 million staff on the path to saving for their retirement.

The landmark shows how far we have come since the start of automatic enrolment. However we are not complacent and now look to the challenges ahead so the roll out continues to be a success and more people benefit.

Next month we will also see the first increase in minimum pension contributions from a total of 2% of the worker’s salary to 5%. We have written to every employer to tell them about the increase and what they will need to do. This should be straightforward for employers but they will need to make some simple checks with their payroll and pension providers to ensure they are ready.
Since last autumn anyone setting up a business and employing staff for the first time will have automatic enrolment duties. Around 16,000 new businesses each month will need to put eligible staff straight into a pension.

While employers do not have a legal duty to tell their staff about the increases in pensions contributions, we recommend that they do. We want staff to get to know their pension and they will want to know they will be saving more. To help employers communicate with their staff about the changes, we have an online template letter – www.tpr.gov.uk/ae-increase for employers to pass to staff. The letter explains what is happening and about the benefits of work place saving.

Automatic enrolment is not an option, it’s the law
Recently we published our compliance and enforcement bulletin which shows how many times we have used our powers. We issued 4,197 more compliance notices and 1,956 more fixed penalty notices between October and December last year compared to the previous quarter.

The increase is in proportion to the rising numbers of employers reaching their duty start date and compliance remains high. We know most employers want to do the right thing for their staff and we are here to help, but we will take action where we need to.  It is simply not fair on the vast majority of employers who have done the right thing if a small minority fail to take the steps they need to take. Employers want to see action taken against those who flout the law.

We don’t want to take employers to court, but we will be tough on employers who do not comply. Automatic enrolment is not an option, it’s the law.

Useful links
New employer? Find out what to do, and by when: www.tpr.gov.uk/employers
Nominate a contact with The Pensions Regulator: www.tpr.gov.uk/nominate
Increases in contributions – find out what you need to do: www.tpr.gov.uk/increase

Article provided by Darren Ryder, Director of Automatic Enrolment, The Pensions Regulator

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