There has been further announcements and coverage of the National Employment Savings Trust (NEST)following the Government review of the scheme. Perhaps the most important point to mention is that this has been given the green light and will mean that from 2017 pretty much everyone will need to be contributing 5% or more of salary towards a pension.

NEST will be phased in (as previously suggested). The largest empployers (those with 120,000+ employees will have to start their NEST from October 2012. Companies with staff of 500-120,000 the roll out date is somewhat later – 1 January 2014 and for everyone else (those with less than 50 employees) the earliest start date is 1 August 2014.

The NEST website states that the Regulator will write to all employers around 12 months before their staging date so that they know when to automatically enrol their eligible jobholders. Three months before the employer’s staging date the Regulator will write again to remind them of the new duties and the need to register.

Employees eligible for automatic enrolment will be:

1. Those who aren’t already active members of a qualifying scheme
2. Aged between 22 years and the State Pension age
3. Earn over £7,475 gross a year.

The qualifying scheme may be the existing employer pension scheme if it meets certain conditions, or if an employer does not have a qualifying scheme they will have to set one up or use a NEST pension scheme.

Employees will be able to opt out of the scheme if they so wish. However for those employees within the scheme it is expected that the employer will have to contribute at least 3% of their ‘qualifying’ earnings. These earnings are their basic salary plus commissions, bonuses and overtime between £7,475 and £33,540 a year (2006/07 terms).

Contribution levels will be phased in over a period of time

Before October 2016
Employer 1%
Employee 1%

October 2016 – October 2017
Employer 3%
Employee 3%

From October 2017
Employer 3%
Employee 5%

So there you have it – for more information visit the NEST website or get in touch.

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