If you already have a qualifying scheme, such as a defined contribution scheme, a stakeholder pension or even a Group Personal Pension you can enrol all of your eligible staff in your company scheme providing minimum contributions levels are met. A defined benefit scheme , such as a final salary scheme also qualifies for auto-enrolment assuming it provides a minimum level of benefits.
If you have members of staff that are not eligible to join your existing scheme, but still fall under the criteria for auto-enrolment, you will be required to enrol them in the new National Employment Savings Trust (NEST). Staff who do not meet the criteria (perhaps because they are too young) can still ask to be enrolled. In these cases, the employer will be required to make minimum contributions to their employee’s pension plan.
If you don’t have a company pension scheme you can either introduce a qualifying pension scheme or auto-enrol eligible staff in the new NEST due to be launch in 2017. In either case minimum contributions will need to be made by the employer and employees.
Employers will face detailed requirement to prove that they are complying with the auto-enrolment regulations. They will need to allow for administration, training, IT and set-up costs on top of the contributions costs associated with the regulations. The Government predicts that the administration costs of auto-enrolment will be around £20 per employee for larger firms and £40 to £50 for smaller companies.
The regulations regarding auto-enrolment may be further refined. You may want also want to find an IFA or ask your financial advisor for the latest information when your business starts to prepare for auto-enrolment. Read more about auto enrolment here