In November’s General Counsel Update, we noted that the Government had delayed the full implementation of the auto-enrolment requirements.
By way of background, auto-enrolment is the process by which employers will be required to enrol their eligible jobholders (broadly, those aged between 22 and state pension age) into either (i) the personal accounts pension scheme (now renamed the National Employment Savings Trust (NEST)); or (ii) their own qualifying scheme. The employer will also have to make minimum contributions in respect of a jobholder, where the jobholder is enrolled into NEST or a defined contribution arrangement.
On 12 January 2010, 11 sets of draft regulations relating to auto-enrolment and other aspects of the 2012 workplace pension reforms were published by the DWP. At the same time, the DWP issued its response to its September 2009 consultation on the draft legislation.
The draft legislation and consultation response make certain important changes to the plans. However, it is worth noting that many aspects of the proposed new regime may change should there be a change of government following the general election. Amongst the key changes revealed by the documents published on 12 January are:
- As expected, the first employers to become subject to the auto-enrolment regime (broadly, the largest) will need to meet the new requirements from 1 October 2012. Auto-enrolment will be phased in from this point onwards on a month by month basis, with the smallest employers only becoming subject to the new regime by 1 September 2016.
- In order to protect workers on a succession of short-term contracts from falling outside the regime, the regulations provide that employers will not be able to postpone auto-enrolment for eligible job holders who have already been postponed in the preceding 12 months.
- The reporting and record-keeping requirements have been simplified: the flat rate fixed penalty notice amount is reduced from £500 to £400 amidst concerns about the potential impact on small businesses.