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

Under the workplace pension reforms, employers will be required to automatically enrol workers into a qualifying pension scheme. Unless the worker opt outs, minimum contributions must be paid. When the reforms are fully introduced, the minimum contribution will be 8% of a band of “qualifying earnings”: 3% from the employer; 4% from the worker and 1% in tax relief. The reforms were initially legislated for in the Pensions Act 2008. The current Government set up a review of the policy, which reported in October 2010. This recommended changes, including an increase in the “earnings threshold” for auto-enrolment and an optional three-month waiting period before workers must be automatically enrolled, which the Government legislated for in the Pensions Act 2011. Implementation of the reforms starts in October 2012 with large employers. Small employers will be required to begin automatically enrolling their employees in 2015. Minimum employer contributions start at 1%, increase to 2% from October 2017 and to 3% from October 2018. This note concentrates on the position from the 2010 general election onwards. For the period before this, see SN 4847 Pensions: Automatic enrolment - background.

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