The biggest shake-up in pension reform for generations will affect 1.3 million employers in the UK. The auto-enrolment scheme will put the onus on employers to contribute to pensions on behalf of their staff, whether they are a multi-national corporation or an employer of just one member of staff, reports corporate support and company compliance advisers London Registrars (http://www.london-registrars.co.uk/).

Currently, only 31 per cent of private sector organisations in the UK are paying into pension schemes for their employees, and given that the state pension offers just £107.45 a week, the Department for Work and Pensions developed the auto-enrolment scheme to tackle the growing pensions crisis. This means that all ‘eligible jobholders’ aged between 22 and state pension age who work in the UK (or ordinarily work in the UK) and who earn more than £8,105 as of the 2012/13 tax year must be automatically enrolled in a pension scheme by their employer. The minimum employers’ contribution is 1 per cent rising to 3 per cent with the employee contributing 0.8 per cent with 0.2 per cent tax relief in year-one rising to 4 per cent with 1 per cent tax relief by 2018.

Company compliance with auto-enrolment will be mandatory by law and it will be down to the employer to choose the type of pension scheme and to set up the contributions via their payroll. They must also find out which staging date applies to them, that is the date the new auto-enrolment law commences for each individual company. Staging dates can be found on the Pensions Regulator’s website at www.thepensionsregulator.gov.uk which has approximately 250 pages of information on the pending legislation.

There is little doubt that a solution to the pensions crisis is essential and auto-enrolment certainly looks encouraging on the face of it – between five and eight million people will be joining workplace pensions for the first time as a result of the scheme. However, employers are voicing their concerns as to the complexity of company compliance with auto-enrolment. Smaller companies are understandably expressing particular concern. They are just as required by law to contribute to a pension on their employees’ behalf as their larger competitors, but are likely to have less internal support, a payroll department for instance, to assist with the management of auto-enrolment.

As part of London Registrars’ corporate and legal support services, the company can advise businesses of all sizes as to how this new auto-enrolment legislation affects them. To find out more, contact London Registars through the website at http://www.london-registrars.co.uk/.