Changes under the Pensions Act: advice for employers

13th of September, 2011 Bookmark and Share

According to the pensions reform outlined by the government in 2008, businesses will soon need to auto-enrol their eligible staff in a compulsory pension plan. There will also be a need for employer pension contributions; by 2017, the equivalent to three per cent of every employee's qualifying earnings must be contributed to their pension. In addition to the one per cent added in the form of tax relief, the employee will also need to make a compulsory contribution of four per cent of their earnings.

Employer pension contributions

Employees entitled to be auto-enrolled under the Pensions Act are those aged from 22 to state retirement age. However, they must have been at the organisation for at least three months and be earning over £7,457 per year. Contributions are deducted from the employee's qualifying earnings, i.e. everything that they make between £6,500 and £33,540 per annum. The employer has to re-enrol their employees every three years, but they are able to opt out of the compulsory pensions scheme within 30 days of an enrolment.

What is the time scale for pensions reform?

There are 43 different start dates on which the Pensions Act will come into effect, determined by the age and size of the company. Certain organisations will need to start preparing very soon, because the staging dates vary from October 2012 to September 2017. Peninsula can provide companies with specific guidance as to when they need to implement changes to their pensions policy.

Preparing your business for the Pensions Act

The most pressing consequence of the Pensions Act is that every UK employer will at some stage need to alter their terms and conditions for staff. To allow for employer and employee pension contributions, all employment documentation including contracts of employment will need to be altered.

To ensure clients are ready for these reforms, Peninsula provides bespoke employment documentation in addition to on-demand employment law advice. This can be obtained through the website, the Peninsula Online resource library or the 24-hour hotline.

Peninsula is also covering the Pensions Act, and its repercussions for employers, in its regular employment law seminars. These sessions take place all over the country and are free for representatives from any business to take part. Visit the website to register your interest in a seminar and book your place.

If you're a member of the media and need any further information, would like to discuss case studies for a particular feature, or be added to our media contact list, feel free to contact Sammual-James McLoughlin, Head of Media, Press and Public Relations at Peninsula Business Services.


Sammual-James McLoughlin
Sammual-James McLoughlin is Head of Media, Press & Public Relations at Peninsula Business Services ( If you are a member of the media and need any further assistance, feel free to contact me.