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Vedder Thinking | Articles UK Pensions Update: Auto-Enrollment


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New laws have come into force in the UK that will eventually require all UK businesses (including U.S. businesses with operations in the UK) to auto-enroll their eligible workers into a workplace pension scheme.

What is a workplace pension scheme?

A workplace pension scheme is an employer-arranged way for an employee to save for his or her retirement. Some workplace pensions are called "occupational," "works," "company" or "work-based" pensions. Employers will be able to use an occupational pension scheme or a personal pension scheme provided it meets certain statutory requirements. If they prefer, employers can enroll eligible workers in the National Employment Savings Trust (NEST), a national defined contribution workplace pension scheme set up by the government that all employers may use to meet their new duties.

Which workers will need to be auto-enrolled?

Employers will need to enroll automatically workers who

  • are not already in a qualifying pension scheme,
  • are age 22 or over,
  • are under State Pension age, and
  • earn more than £9,440 a year (figure to be reviewed annually) and work or usually work in the UK.

Other employees can also request to be enrolled, and each employee is entitled to opt out or cease his or her pension scheme membership.

When are employers required to begin enrolling their workers?

UK employers have been split into a number of bands according to the size of their workforce and social security codes. Each band has been allocated a specific "staging date" month from which the employers will be required to commence the enrollment procedures. The staging timetable has already started and will continue to run until February 1, 2018, with large employers becoming subject to the enrollment obligations before small employers.

What action should UK employers be taking now?

All UK businesses need to be aware of this auto-enrollment requirement and should act now to ensure that they understand and are ready and able to comply with their duties. It is important to have the right procedures and systems in place to smoothly facilitate the setup phase, the auto-enrollment itself and the continuing administrative requirements.

In connection with the matters described in this bulletin, Vedder Price can assist U.S. corporations with UK-based businesses in their review of their auto-enrollment obligations and will advise on any necessary implementations as a result of these new laws. If you have questions about this update, please contact Sam Tyfield at +44 (0)20 3667 2940, Jonathan Edgelow at +44 (0)20 3667 2925, Lydia Sadler at +44 (0)20 3667 2926 or the Vedder Price attorney with whom you work.


Jonathan Edgelow