If you run a business in the UK you’ll likely to be aware of the term Now Pensions auto enrolment, as this is the main plank in the government’s controversial changes to workplace pension legislation, which is due to begin properly this year.

The changes, which involve the switch to the auto enrolment pension, have been greeted with anger by many smaller business owners, because of the extra time and monetary obligations that they entail for employers during a period when it is a challenge for many such businesses simply to keep going.

Nonetheless the changes are happening so if you’re an employer who wishes to avoid potential legal issues it’s vital for you to know what the auto enrolment pension plan involves and what you need to do.

There are two basic differences between the auto enrolment pension scheme and the kinds of pension funds that businesses have been operating up until now with the first major difference being signalled by the name.

1. The new scheme requires all employees who meet the eligibility requirements being automatically signed up for the scheme and having a part of their qualifying earnings placed into either the National Employment Savings Trust (NEST) or their employers private pension fund; whereas previously it was a matter of individual choice for employees whether they wanted to sign up for a pension fund or not.

Under the new scheme, employees still have the choice to opt out once they have been signed up for it, but must do so within a month of being signed up.

2. The other big difference is the fact that under the auto enrolment pension scheme employers have an obligation to contribute financially to the pension funds of each employee on the scheme, rather than simply managing these funds.

The minimum required contribution for employers is three percent of the minimum eight percent of qualifying earnings that must go into the scheme for every employee.

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