Pension auto-enrolment

FROM October 2012 the very largest employers will be required to start automatically enrolling eligible staff into qualifying pension schemes.

UNISON supports auto-enrolment in principle as extending pensions coverage is a positive step towards all workers having access to a decent pension in retirement.

We recognise our members have questions about auto-enrolment so we have designed a Q&A that we believe will make things clearer.

What is this all about?

Nearly all workers are being automatically put into a pension scheme – The Westminster Government believes an extra 5-8 million people will save for the first time in a pension through these reforms.

The exact date employers are compelled to comply will depend on how many staff they employ and in any event between the 1 October 2012 and the 1 February 2018.

The very biggest employers will have to comply first and these pension schemes will have to satisfy very minimum standards.

Eligible staff will be able to opt-out should they wish to but will be re-enrolled in a qualifying scheme at 3 yearly intervals.

How will it affect me?


Most staff not in a pension scheme – mainly outsourced workers; Staff who leave (opt-out) their current pension scheme.

If you opt out in future you will be re-enrolled every three years into a pension scheme/arrangement chosen by your employer – in the public sector this will be your normal public service scheme.

Not affected:

Staff in a public service pension scheme; Outsourced or private sector staff in an employer pension scheme that meets minimum requirements.

Staff not affected will remain in their current scheme.

Am I eligible?

Your employer will have to put you in a qualifying scheme if you satisfy all the following:

You are aged between 22 and State Pension Age; You pay income tax (i.e. You earn over £8,175 pa); You work under a contract of employment (i.e. are an employee) or have a contract to perform work or services personally and are not undertaking the work as part of your own business.

Unless you are truly self-employed you should be an eligible worker for pensions auto-enrolment purposes as long as you satisfy the above conditions.

Also, zero hour contracts, office holders, volunteers, people on secondment, carers, nannies and agency workers are all potentially eligible.

Qualifying scheme definition:

Employers have to ensure they offer staff a pension scheme that provides pension benefits at least equivalent to the statutory requirements. The following schemes are fine:

A defined benefit scheme (final salary and CARE) that satisfy contracting-out requirements; A defined benefit scheme that is contracted-in to S2P and has at least a 1/120th pension build up rate; Group stakeholder and personal pension schemes where the contributions paid in exceed the statutory minimum.

What if you don’t want to be a pension scheme?

You can opt-out at anytime.

You will be entitled to a refund of your contributions unless you opt-out after the scheme specified period where instead you will have built up a pension which will be retained in the scheme.

You should note that you could be re-enrolled every 3 years running from your employer’s Staging Date.

Your employer must:

Ensure all eligible workers are auto-enrolled in a qualifying pension scheme.

Re-enrol all eligible workers in a qualifying pension scheme at 3 yearly intervals from official “staging date”.

Communicate changes to ALL WORKERS.

Give staff information on how to opt-out (but not allowed to send forms).

Register with The Pensions Regulator to demonstrate compliance.

Keep detailed pension records for 6 years. Employers will need to keep track of staff ages and earnings levels at all times.

Your employer must not:

Encourage or induce workers to opt-out of a qualifying pension scheme.

Employ recruitment practices that benefit job applicants who say they will opt-out.

Treat a worker unfairly or put at a disadvantage because of automatic enrolment.

Provide false or misleading information to The Pensions Regulator.

UNISON members should:

Ensure they understand what their employer is sending them and the importance of saving in a pension.

Alert their Reps where employers appear to be encouraging opt-outs or are not complying fully with their obligations.

Encourage their Reps to campaign for improvements to the pension scheme – for example by attaining an NAPF Pensions Quality Mark where a defined contribution scheme is what’s offered.

UNISON believes:

UNISON supports auto-enrolment as it should help to encourage pension saving.

However, this should not be used as an excuse for employers to “dumb-down” existing good quality pension schemes.

Also, it should be noted that “minimum” schemes are not likely to provide significant pensions on retirement.

The minimum contributions required for defined contribution schemes need to be vastly higher and the issue of ever falling annuity rates needs to be addressed.

Employers should not introduce auto-enrolment at the expense of employees pay.

If you have any questions that are not answered here then do not hesitate to contact UNISON.