A recent alert bulletin from Towers Watson said the new schedule calls for employers with at least 120,000 workers in their “pay as you earn” plan to put the auto enrollment into practice by the government’s official kickoff of October 1, 2012. After that, deadlines will be implemented until September 2016, but all employers with at least 50 staff will be required to comply by July 2014.
While acknowledging that most employers will not take any steps toward the new system until final regulations are issued, the alert asserted that the timetable’s information was still useful because it indicated when an employer’s pension costs can be expected to rise if auto enrollment boosts participation rates. The date will also indicate when employee communications will be needed and how much time employers have to prepare compliance processes.
The alert said the new government document also indicated that the minimum employer contribution will remain at 1% of “qualifying earnings” for a year longer than previously intended. It will now rise to 2% as of October 1, 2016, and to 3% as of October 1, 2017.
According to Towers Watson, the new auto enroll regulations come from the Pensions Act 2008 and can be implemented either through an employer-sponsored plan or a new national pension plan (now to be called the National Employment Savings Trust, or NEST). Employees who do not want to save must actively opt out.
Minimum standards will apply to pension plans for both newly enrolled employees and existing participants.