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Auto-Enrolment, Why do it yourself?

Pensions

Auto Enrolment regulations for pension schemes.

  • The employee does not have to apply to join. They are automatically enrolled into the pension scheme.
  • The employee can be automatically enrolled on the first day of their employment
  • The employer is committed to paying in minimum contributions
  • The employee can opt-out. The employer cannot.

Existing schemes

If you already have a pension scheme in place then you might be able to continue using it for existing members. If you want to use it to automatically enrol all eligible jobholders then you have to make sure the scheme meets those legal requirements.

If it does not meet the criteria, it may be possible to change the terms of the pension policy but you will need to contact your pension provider to confirm this.

If the policy conditions cannot be changed then you will have to choose a new pension scheme.

Types of pension schemes

There are two types of “Money Purchase” schemes you can choose from for Automatic Enrolment. They are:

Master trust

A master trust is a trust-based pension for a multitude of employers.

It is open to the employees of many employers, the staff of which are all treated equally and follow the same rules. Professional trustees are appointed as sole trustee of the scheme, who will then appoint investment advisers and administrators.

Master trusts have been the structure of choice for auto-enrolment pensions ever since NEST, the government-backed scheme, was launched. NEST is a master trust governed by a board of independent trustees.

Group personal pension

A group personal pension scheme on the other hand is a contract-based arrangement as opposed to a trust. The employer appoints a pension provider (normally an insurance company) to run the scheme. There is then a contract between the provider and the employer and the pension provider makes all the decisions about how the scheme is run.

For Automatic Enrolment the employer must make pension contributions to the scheme.