Auto-Enrolment: NEST Pension Reform Dates
The announcement that following the introduction of the National Employment Savings Trust (NEST), employers will have to start making pension contributions for all of their employees from 2012 is only true for employers with more than 120,000 employees.
The start date for the roll out of the scheme is October 2012 but not all employers will have to comply on that date. Those with less than 500 employees, for instance, the date is January 1st 2014 and for those with less than 50 employees the earliest start date is August 1st 2014.
According to the website:
‘The requirement to be NEST compliant starts from October 2012 and will vary dependent on size of business and PAYE reference number. 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:
- those who are not already active members of a qualifying scheme
- aged between 22 years and the State Pension age and
- earning 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.
Minimum contributions levels for qualifying schemes:
| Minimum Contribution | Employee Pays | Tax Relief | Employer Pays |
| 8% | 4% | 1% | 3% |
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:
| Employee Pays ** | Employer Pays | |
| Before October 2016 | 1% | 1% |
| October 2016 - October 2017 | 3% | 3% |
| From October 2017 | 5% | 3% |
** Less tax relief.
