Did you notice a difference in work?

Author: Huw Jones
Published: 3rd July 2012
Categories:

The long awaited workplace pension reform law came into effect on 1st July 2012. Did you notice a difference?

This new legislation marks the start of the new duties for employers which will (eventually) see them automatically enrol every single one of their eligible jobholders into a work place pension scheme. Just think about that last sentence for a minute:

This new legislation marks the start of the new duties for employers which will (eventually) see them automatically enrol every single one of their eligible jobholders into a work place pension scheme.

The key words in that sentence are:

Legislation – i.e. it’s now the law.
New duties – more stuff to do.
Automatically enrol – some more stuff to do
Eligible jobholders – an assessment of your workforce is required
Workplace pension scheme – you need a pension scheme.

So why didn’t you notice a difference?
Employers don’t have to comply with the new law until their staging date? Phew!

What’s a staging date?
This is the date by which time each employer has assessed their workforce as workers or non-workers (and sub-categorised their workers as eligible jobholders, non-eligible jobholders and entitled workers) and automatically enrolled their eligible jobholders into a qualifying workplace pension scheme. Simple.
What’s even simpler is how an employer finds out their staging date. It’s based on the last two digits of their PAYE scheme reference number. Now as you might imagine, already stressed business owners will take one look at this and say: “I’m not going to bother. They can stick it – just more needless bureaucracy”.

Well the legislation is one step ahead. It has pre-empted that attitude and has some quite serious “teeth” to ensure that employers don’t engage in certain activities. In particular the law places specific requirements on employers not to: induce workers to opt out or cease their membership of the qualifying pension scheme, indicate during a recruitment process that a worker’s decision to opt out of automatic enrolment will affect the outcome, or fail to do something which results in the worker ceasing to be in active membership whilst still employed by the employer. Such behaviour could lead to enforcement action resulting in monetary penalties being imposed.

Let’s be clear here: for innocent non-compliance, employers will get a letter encouraging them to sort things out. Persistent offenders will incur fines for each day they are not compliant. The worst offenders will do some time at her majesty’s pleasure. That’s real teeth right there.