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Q. What is Auto Enrolment?

A. You may have heard talk in the media recently about the new law on workplace pensions, but many small companies are unaware of the impact it will have on them or are struggling to understand what it means.

Auto Enrolment means that all companies must automatically enrol eligible staff into a workplace pension, and the company MUST contribute to the pensions.

At the beginning, companies must contribute a compulsory minimum of 1pc but this will eventually increase to 3pc from October, 2018.

Employees may opt-out of joining the scheme, but this must be their decision and may not be influenced by the company.

All companies who have employees will be affected by this new legislation, no matter how small.

Currently, all large companies should already be complying and have implemented Auto Enrolment. From August, 2015, onwards, companies with 30 to 49 employees will be required to auto enrol their employees into a workplace pension. The remainder of employers with under 30 staff will follow between January, 2016, and April, 2017.

It’s important to prepare for Auto Enrolment and you can find out your Staging Date – which is the date you need to start deducting pension contributions – on the Pensions Regulator website www.the pensionsregulator.gov.uk However, you will also receive information from them approximately one year before this date.

You will need to open a company pension scheme.

If you fail to comply within the timescales assigned to your company, the Pensions Regulator can issue penalties up to £50,000.

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