Auto Enrolment a simple summary of your requirements and options.
NEST Pensions are a major concern for the majority of employers in the UK, below is our summary of the basics you need to know.
What is NEST?
It is likely that by now you will have heard about the National Employment Savings Trust (NEST Pensions). Basically it is a scheme created by the government to ensure that people begin to save for their retirement and that employers make a contribution towards this.
Employers are legally bound to enroll their employees into the scheme unless another qualifying pension scheme is in place that they can make the same level of contributions into. All employers must ensure that they are ready to contribute to NEST Pensions or another qualifying scheme by their Staging Date (see below) at the very latest.
Auto Enrollment began in October 2012 with the largest companies in the UK and working towards the smallest companies in April 2017.
The Department for Work and Pensions wrote to each firm 18 months and then again 12 months before their Staging Date to confirm when and how they can begin contributing to the NEST scheme. Having another qualifying scheme in place before your staging date is often preferable for both the employer and employees.
Please use the following table to find out when your staging date was:
For employers with fewer than 50 employees, their staging date was between June 2015 and April 2017, based on their PAYE reference number.
Who Needs Enrolled?
- All employees with qualifying earnings of over £8,105 or more a year.
- Non Eligible Workers that request enrollment
- Workers without qualifying earnings that request enrollment
Contributions are based on a percentage (%) of ‘qualifying earnings’ between £5,668 and £41,150 per annum, therefore almost all UK employees will qualify.
Contributions will be capped at a maximum of £4,400 (2013/2014) per annum per employee.
All employers must ensure that their staff with earnings above £5,668 are making contributions to NEST or another qualifying pension scheme.
Qualifying Earnings includes salary, wages, overtime, bonuses and commission, as well as statutory sick, maternity, paternity or adoption pay.
Once your staging date has passed the following will be the minimum levels of contributions allowed into the NEST or other qualifying pension scheme:
The total contribution is the minimum percentage of the employees earnings between £5,668 and £41,150 that must be contributed to a pension scheme. The employer minimum, as it suggests is the minimum that the employer must contribute. The difference between the two figures can be passed to the employee to pay, however should the employer wish to pay more, the employees burden can be reduced.
Please note that if you don’t begin making contributions at your staging date, you could be subject to significant fines, as well as having to make up the missed contributions to the pensions.