AUTO-ENROLMENT

Q.HOW MUCH DOES SOMEONE HAVE TO EARN TO BE ENROLED?
A.The earnings threshold for auto-enrolment into the National Employment Savings Trust (NEST) will be the same as the income tax threshold, currently £7,475 (much higher than the £5,035 level mooted by the last government). But Peter Woods, pensions partner at PwC, points out the coalition government has said it wants to raise the income tax threshold closer to £10,000 by the end of the parliament. That’s good for smaller employers: by the time they have to adhere to the new rules, the threshold will be much higher, meaning lots of part-time staff will not be auto-enroled into NEST.

Q.WHEN DO EMPLOYERS HAVE TO ADHERE TO THE NEW RULES?
A.The largest employers, such as Tesco and Royal Mail, will start auto-enrolling staff from October 2012. Other employers will then have to comply in stages, until the smallest (e.g. market stalls with one employee) auto-enrol staff by 2016.

Q.HOW MUCH WILL EMPLOYERS AND EMPLOYEES CONTRIBUTE?
A.Eventually, employers will have to contribute three per cent of earnings over £5,000, while employees must contribute five per cent of earnings (one per cent of this will be refunded via tax relief).

Q.WHAT ABOUT EMPLOYERS THAT ALREADY HAVE A SCHEME?
A.Employers that already have a scheme will have to show that it is broadly as good as NEST. But they will not have to show that it is exactly the same: employer contributions could be five per cent of base pay, rather than three per cent of earnings, for example.