Pensions: Automatic enrolment - 2010 onwards - Commons Library Standard Note

Published 09 January 2015 | Standard notes SN06417

Authors: Djuna Thurley

Topic: Pensions

Provisions in the Pensions Act 2008 place a duty on employers to automatically enrol jobholders into, and to contribute to, either a “qualifying pension scheme” or a new personal accounts scheme, a “simple low-cost pension scheme”, also established by the Act (and now called the National Employment Savings Trust (NEST)).

The current Government set up a review to look at whether the proposed scope for the policy was still appropriate in the light of developments since it was formulated. The review, which reported in October, recommended some changes to the design of the policy. For example, it recommended an optional waiting period of up to three months before an employee needs to be automatically enrolled and an increase in the earnings threshold for auto-enrolment. These were legislated for in the Pensions Act 2011. Other core aspects of the policy were confirmed by the review. For example, the new duties will apply to all employers regardless of size.

The reforms are being phased-in by employer size, starting in October 2012 with large employers. Small and micro employers will be brought into the reforms between June 2015 and February 2018. The minimum contribution will also be phased-in, with employers paying the full three per cent until October 2018.

The background to the reforms is covered in more detail in Library Standard Note SN 4847 Pensions: auto-enrolment – background.

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