New workplace pension rules
Changes to the Pension Act 2008 will soon require all employers to enroll existing and new staff to a
pension scheme within in three months of them joining the organisation.
This and how to manage a change in employment contracts was the subject of two joint seminars held
earlier this year by Pharon Independent Financial Advisers and Gullands Solicitors, which were attended by a number of firms in the County.
Elizabeth Rule, IFA at Pharon said: “The new legislation is being brought in to deal with the looming
pensions crisis. Employers can choose to use any of the pension schemes that are currently available
in the market for their staff, or they can consider NEST, a new pension scheme being introduced to meet the needs of low to moderate earners.
“There will be a phased introduction to the enrolment requirements; companies with 120,000+ employees will have to enroll all staff from October 2012, and by September 2016 all employers should be part of the scheme. Automatic enrolment applies to all employees including those with temporary and part time workers who earn over the income tax threshold, and the employer will have to make pension contributions as well as the employee.”
Amanda Finn, Solicitor at Gullands said: “Employees can opt out, but they must do so within a month of being enrolled to get their first contribution refunded. Penalties for non-compliance by employers include fines of £500 with daily additions of £50-£10,000.”
She adds: “Employers need to start thinking how to manage the change in their employee contract terms. Generally employee consent is required to change contract terms unless the contract allows for flexibility. There are many ways that employers can obtain consent, and various procedures they need to follow when seeking to amend employment contracts. If consent cannot be explicitly obtained, in many cases if the employee continues to turn up for work, the employer can argue that they have accepted the changes to their contract.”