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Career Advice

Employee introduction to automatic enrolment scheme

Pensions minister Steve Webb has announced that large firms will play guinea pig to auto enrolment schemes. Automatic enrolment is a new law implemented by the government intended to make saving for retirement much easier for employees. All employers will enrol their employees into a workplace scheme – as qualified by the government – in order to combat the fact that many workers don’t take up pension benefits thanks to not making the application themselves.

Employees who are set to be automatically enrolled will be:

  • Earning more than £8,105 a year

  • Working in the UK

  • Below the state pension age

  • At least 22 years old

  • Not already in a qualifying work pension scheme

PensionIn order to test the water, auto enrolment will be first implemented in bigger firms. Webb hopes that by the time it is used in smaller firms, all the unnecessary intricacies can be omitted and make the scheme much simpler and easier to implement.

Speaking of the plan, the minister affirmed that the idea would make things easier for companies when it comes to pensions.

Speaking of the plan, Webb said: “What we will do, is practice it on the big guys, learn our lessons, and then do a round of simplification so that by the time we get it to small and medium-sized firms those irritating things that don’t really need to be there and the things that don’t make sense we can iron out.”

The idea of using the scheme on bigger companies and ‘ironing things out’ has been met with varying degrees of disapproval from pension experts.

According to Pension expert Scott Mullen from mypensionexpert.co.uk it’s not in good time for bigger employers.

Speaking of the auto-enrolment regime, Mullen said:  “This latest announcement of simplification of Auto Enrolment rules for SME’s will no doubt be welcomed for the UK’s smaller businesses but will obviously come as too little too late for the large employers.

“It is unfortunate that these great policy changes announced by the government punish those most prepared. We have seen many examples in the past where large organisations have efficiently prepared for major changes at great expense in time and resources only to have their best efforts wasted by a whimsical government minister.

“A great example being home information packs in recent years where a whole industry was built up to provide a service only to be scrapped by a later government. That said, any simplification will be very welcomed by all concerned”

Automatic enrolment began in October of last year, but will be introduced to companies gradually over the next 5 years.


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