Is there Confusion in the Latest Pension Rights Scheme from the Government?

In October 2012 the government pension initiative to try and ensure the general populous was provided for once they had retired came into force. As with many initiatives from the UK government there was always room for red tape to cause the process to come to a grinding halt, the question had to be, was this latest scheme going to be embroiled in red tape.

Before we can fully understand we need to know exactly what the scheme was and who would qualify for it. So what is at the heart of this new pension legislation?

  • The government has passed legislation that means all employers must provide and automatically enrol some employees into a workplace pension scheme.

Initial feedback suggests that the scheme has been well received and is easy to administer the main area of potential contention being who should be automatically enrolled and who should not. In truth the guidelines are fairly straight forward and can be seen below.

  • Employees must be over 22 years old to qualify.
  • Employees must earn over £9440.00 per annum.

These two criteria are the only two that qualify for automatic entry into the workplace pension scheme.

Because an employee does not meet the criteria does not mean that they cannot enrol in the workplace pension scheme but it does mean the employer does not have to enrol them automatically.

Exceptions to these basic criteria are as follows

  • If an employee is under 22 years old but earns over £9440.00 per annum they can ask the employer to enrol them into the pension scheme and the employer must enrol them.
  • If the employee is over 22 years old but earns under £9440.00 per annum then the employer must enrol the employee into the scheme, the only point to note here is that the employer does not have to pay into the scheme if the employee earns under £5668.00 per annum only employees contribute if their earnings are below this £5668.00 threshold.
  • Employees who are already enrolled in the workplace pension scheme already would not qualify to be enrolled in a workplace pension scheme as it is correctly deemed that they are already part of the scheme.

For those who are in doubt or confused the advice would be to seek out expert advice from employment solicitors. These employment law specialists have been preparing for this change to pension rights and are in a perfect position to advise confused employees and employers on the finer detail of this aspect of employment law.