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This is a phrase I have heard a few times lately. I’m no psychologist, so I don’t know if this is wishful thinking on the part of an employer who doesn’t want to set up a pension scheme and pay into it, or if employees really don’t want to save for their retirement, for whatever reason that may be.
The way auto-enrolment has been devised is that it works on apathy – eligible employees are enrolled into a pension automatically (hence the name!) and must make a conscious decision and take action themselves if the don’t want to be in. This is why the opt-out rate is so low at between 8%-14%.
‘Bob’ is an employer and he is convinced that all his employees want to opt out. Bob says that he doesn’t trust pensions and none of his employees will be able to afford to pay in anyway.
Unfortunately for Bob, he still has to meet all his duties as an employer and set up a pension scheme by his staging date. He must enrol his eligible staff and pay contributions.
The first set of contributions must be deducted and paid to the pension provider. On receipt of these contributions the provider will send out membership information directly to the employees.
The only way an employee can opt out of the pension scheme is by contacting the pension provider once thy have received their joining pack.
Employees can’t ask Bob to opt them out of the scheme. They can’t opt out before they’ve joined the scheme either.
If an employee opts out within the first month, their membership is undone and they will receive a refund. If they ask to leave the scheme after this time they won’t receive a refund and their contributions will need to stay in the scheme until they retire.
Bob must not encourage his staff to opt out or tell potential new employees that they will have a better chance at getting the job if they opt out of the scheme. The penalty for this behaviour is a hefty fine from The Pensions Regulator.
There’s no getting away from it, if you have employees who earn over £833 a month and are aged between 22 and state pension age, you WILL have to set up a pension scheme. If your employees earn less than this or are outside the age range, read our blog here to understand what duties might still apply to you.
If you think you might need to set up a scheme, or would like to talk through your circumstances, please give us a call on 0800 160 1233. We’ve got lots of useful information and guidance on our website if you need it: http://www.aefasttrack.com/
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What do our customers think..?
"We wanted to embrace Auto-Enrolment to get good pensions in place for our team early. We interviewed a couple of companies to assist us, and Sarah gave a very good case for her company. We are confident that we made the right decision! From selecting the right provider, through to setting up the systems and even presenting to our staff, Sarah and her team were excellent. I don't hesitate recommending the Auto-Enrolment Bureau to anyone looking to enrol their company. My only words of advice are, do it early!"
Richard Hardstaff, Director, Polydron (UK) Ltd