Qualifying UK employees and workers must be automatically enrolled in suitable pension schemes beginning October 1 in order to promote saving for retirement. Suitable pension schemes include defined contribution or defined benefit schemes. There is no obligation to enroll an individual who is already an active member of a qualifying employer scheme. Importantly, employers must make financial contributions to such schemes in respect of each enrolled individual (as must the individual). 

The basic rules are: 

  •  the employer must enroll jobholders (employees and workers) who work or ordinarily work in the UK under a contract, who are aged between 22 and the state pension age and who earn at least £8,105 per annum (in the tax year ending April 5, 2013);
  •   “staging dates” have been set for compliance, depending on the size of the employer; for example, those with more than 120,000 jobholders must comply beginning October 1, 2012; those with less than 500, from January 1, 2014; less than 250, from April 1, 2014; less than 90, from July 1, 2014; and most employers with fewer than 50 jobholders will not have to implement the new rules until  August 1, 2015;
  •  contributions to defined contribution schemes will be phased in over two transitional periods that span six years.  Ultimately, beginning in October 2018, employers will be required to contribute 3% of band earnings each year, whilst the jobholder will contribute 5%;
  •  the National Employment Savings Trust has been established by the Government to enable employers with no qualifying schemes to meet their statutory auto-enrolment duties;
  •   jobholders who are automatically enrolled into the scheme have a statutory right to opt out. However, they will be automatically re-enrolled every three years (so having to re-consider their pension choices periodically);
  •  those earning less than the qualifying earning band will still be entitled to join, but they have no right to employer contributions;
  •  employers are required to tell jobholders about the scheme; and
  •  the UK Pensions Regulator is responsible for enforcing the new mandatory enrollment requirements. Failure to comply could result in escalating fines and criminal sanctions.
Tags: Auto-Enrollment, National Employment Savings Trust, Non-U.S. Employee Benefits
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Photo of Chris Bracebridge Chris Bracebridge

Chris Bracebridge specialises in advising multinational employers on international employment and global mobility matters, including complex transactional issues and senior employee retention and termination arrangements. He co-heads a Global Workforce Solutions team providing the employment, benefits, tax and immigration advice required in these…

Chris Bracebridge specialises in advising multinational employers on international employment and global mobility matters, including complex transactional issues and senior employee retention and termination arrangements. He co-heads a Global Workforce Solutions team providing the employment, benefits, tax and immigration advice required in these complex situations. A keen advocate for increasing the diversity of the legal profession, Chris also leads the London office’s diversity, equity, and inclusion efforts.

Chris’ UK domestic practice comprises contentious, commercial and advisory employment experience. He advises on the HR aspects of company and business acquisitions and disposals, and outsourcing transactions, represents major employers in dismissal, discrimination, and whistle-blowing cases, and advises corporate clients on the full range of day-to-day employment issues (in particular, listed company executive departures), as well as data privacy and pensions matters.

Covington’s Employment team was shortlisted for three UK national awards in 2014/2015. Mr. Bracebridge was shortlisted for Assistant Solicitor of the Year 2009 by The Lawyer magazine. He has gained valuable in-house experience whilst on secondment to two global financial institutions – a major U.S. investment bank and a leading UK bank.

Chris regularly trains and presents to clients and external organizations and writes articles for both the legal press and client publications. He has spoken at events and conferences in the UK, U.S., and Europe on a range of issues such as global mobility, executive departures, redundancy, gender pay gap reporting, data protection and transfers of undertakings.

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