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Employers Zone > Workplace Pension Reform

Workplace Pension Reform

Starting from October 2012 the UK government has introduced new legal obligations that will affect most employers over the next few years. As an employer you have a vital role to play in helping your workers save for later life.

What are my new workplace pension scheme duties?

Your new workplace pension scheme duties may be starting soon.

These duties mean you may need to enrol some or all of your workers into a pension scheme that meets certain legal standards, known as a qualifying scheme. You may also need to make contributions into their pension pot.   

Which workers will I need to enrol?

Under the new legislation, you will need to:
- Automatically enrol and pay minimum contributions for any workers aged at least 22 but under State Pension age, and who earn more than £10,000* in a year
- Enrol and pay minimum contributions for any workers at least 16 but under 75 who earn from £5,824* to £10,000* in a year and who ask to be enrolled

You also need to enrol any workers aged at least 16 but under 75 who earn less than £5,824 and who ask you to enrol them. However, you don't need to pay contributions for these workers if you don’t want to.

*These figures apply to the 2015/16 tax year, and will be reviewed every year by the government.

How much will I need to contribute?

If you choose a Defined Contribution (DC) scheme such as the BCF scheme as your qualifying scheme, the minimum contributions you must pay are based on a band of workers' earnings known as qualifying earnings.

'Qualifying earnings' means total earnings for each of your workers (including bonuses, overtime and benefits) between £5,824 and £42,385*. The amount you need to contribute will start at a minimum of 1 per cent of qualifying earnings and will rise to a minimum of 3 per cent by 2018.

* These figures apply to the 2015/16 tax year, and will be reviewed every year by the government.

Find out more

When do my new duties start?

As an employer your business has been allocated a staging date by the government, which you can find out from the Pensions Regulator. This is the date the new duties come into force for your business.

All employers will need to comply, but the new duties are being introduced gradually. Large employers, based on the size of their largest PAYE group, are affected first, with medium and smaller employer duties starting later. Automatic enrolment will include every UK employer by 2018.

It's important to note that one part of the new duties came into force in July 2012 for all employers regardless of size. The new rules prohibit employers from inducing or offering incentives to their staff or prospective employees to abandon retirement saving. This applies to both existing workers and potential new recruits - for example making a job offer or higher salary conditional on not joining the employer’s automatic enrolment scheme. 

The Pensions Regulator will write to you about Automatic Enrolment 12 months before your staging date.

Automatic Enrolment will mean some initial and ongoing changes for your business. You'll need to allow 12-18 months to prepare for the changes, and you may wish to bring in professional help to ensure you meet your duties.

For more information read our booklet ‘Automatic Enrolment - Are you ready?’
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