Posted by Sally Nichols on 02 Oct 2012
The process of pension auto enrolment has begun.
The process started with the biggest employers on 1 October 2012 and will be staggered over the next few years until 2018. The smallest employers begin auto-enrolment for their staff in January 2015.
Contributions will start with employees paying in a minimum of 0.8% of their pensionable earnings, this will eventually rise to 4% from the employee in 2018.
On top of that employers will have to pay in 1% of their employees’ pensionable earnings, rising to 3% in 2018, with tax relief contributing another 0.2%, rising to 1% in 2018, giving a total of 8%.
The contributions will be invested and then when the employee retires, currently at 55 at the earliest, they will have to buy an annual pension, or annuity, with their accumulated pot.
The pensions regulator have information on their website to guide employers through the process.
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