Workplace Pensions are Changing...and You Need to Know

Posted: Aug 21, 2012

Workplace pension law is changing and every employer will have to act to fulfil their new legal duties.

Pensions Act 2012

The Pensions Act is designed to encourage a saving for retirement culture in the UK. This new legislation requires all employers to automatically enroll members of their workforce (depending on age and salary level) into a pension scheme that meets certain minimum standards. Employers are then required to make contributions to this pension scheme, in addition to the contribution made by their employees.

Auto enrolment will be phased in over 5 ½ years with the largest employers leading the way with the first staging date on 1 October 2012, followed by medium-sized employers and lastly small and micro employers. Employer’s contributions are intended to make the aims of the Pensions Act more attractive to employees, many of whom have previously avoided entering into long-term pension schemes themselves.

The Pensions Act states recruitment businesses must adhere to the legislation, making the same level of contributions as all other employers. If your agency temporary workers are contracted on a PAYE basis (or through an Umbrella company) then this change in pensions legislation could result in the increased costs being transferred to you from the agency by way of a charge rate increase.

If your current temporary workers are employed on a PAYE basis (or through an Umbrella company) and you are hiring them through one of the larger national agencies, because of the large volume of PAYE and Umbrella workers they employ, you could fall into the first staging category and the agency could be asking you for a rate increase to cover the increased cost imminently!