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Auto-enrolment is designed to remove the barriers to joining a pension scheme.

What is auto-enrolment?

Auto-enrolment has been introduced by the Government. It is new legislation that means eligible jobholders will usually be automatically enrolled into a qualifying workplace pension scheme. These schemes have to be of a minimum standard.

Qualifying pension schemes

Employers can choose the qualifying scheme they use for eligible workers, and it ensure it meets the minimum standards. For example, defined contribution schemes have to meet minimum contribution levels and defined benefit (DB) schemes have to meet minimum benefit levels. You can use your existing scheme if it meets/can meet these standards, or you could use a new scheme like those provided by The Pensions Trust.

All pension schemes provided by The Pensions Trust are qualifying workplace pension schemes. Where the pension scheme is a defined contribution (DC) scheme, the scheme is qualifying subject to the employee and employer meeting the minimum contribution levels.

Phased introduction

Although the new duties were introduced on October 2012, the requirement to auto-enrol eligible jobholders will be phased in gradually. This means that not all employers will be obliged to auto-enrol their eligible jobholders at the same time. Employers with the largest number of employees on the largest Pay As You Earn (PAYE) scheme on 1 April 2012 will have the earliest staging dates (the date by which you have to have workers enrolled).

The option to opt out

Eligible jobholders will be able to opt out of the scheme after being auto-enrolled. However, the employer will be required to automatically re-enrol eligible jobholders who have opted out around the three year anniversary of the staging date. There is an exception to this re-enrolment, whereby an employer does not have to re-enrol an eligible jobholder who opts out of pension saving in the twelve months prior to the re-enrolment date.

If you are using a pension scheme from The Pensions Trust as your qualifying workplace pension scheme, please also refer to ‘What should I do with contributions deducted during the opt out period?