Tandy Financial Services is an
Independent Financial Advisory practice

We provide advice and services to individuals, families and businesses.

Workplace Pensions (Auto Enrolment)

Many companies offer a pension scheme to their employees.

There are numerous different types available and usually the company will put some money into your pension if you decide to join. 

It is important that you take into account your existing pension provision or that from your previous employer before making any decisions.

We will be able to explain the features of your company’s arrangements, and may be able to assist you to select the right investment funds for your own needs.

Auto Enrolment

People are living longer lives. This means people can enjoy more time in retirement and need to plan and save for their later years. The Government estimates that around seven million people are not saving enough to meet their retirement aspirations and as such has put changes in place, which commenced from October 2012 which affects both employers and employees

What do the changes mean for employers?

Since 2012, employers have been required to automatically enrol all ‘eligible jobholders’ into either the National Employers Savings Trust (NEST) or an alternatively another form of scheme, such as a Group Stakeholder Scheme, Group Personal Pension Scheme or an Occupational Pension Scheme which is deemed as a ‘qualifying’ or a ‘certified’ workplace pension. Both Employers and Employees have to make minimum contributions into the scheme. 

Who needs to be automatically enrolled?

All jobholders working in Great Britain aged at least 22 years old who have not yet reached State Pension age and are earning more than £10,000 a year you will need to be automatically enrolled into either an employer’s workplace pension or NEST.

What is the minimum contribution employers must pay?

Under NEST (or an alternative ‘qualifying scheme’), employers will need to contribute 3% on a band of earnings for eligible jobholders – between £6,240 (the lower qualifying earnings band limit for 2020/2021) and £50,000 (upper earnings limit for 2020/2021). 

Who can opt in?

Jobholders aged between 16 and 22, and between State Pension age and 75 who are earning more than the above figure, are able to opt in to their employer’s workplace pension and will qualify for the compulsory minimum employer contributions. Those earning below the above figure may opt in to their employer’s workplace pension but their employer is not be required to make a contribution, but may do so if they wish. Individuals may opt out of NEST should they choose. Employers are also will be required to auto-enrol those individuals again, 3 years later.

Which scheme can employers use?

Employers will be able to choose the pension scheme(s) they want to use provided the scheme(s) meet certain quality criteria (including any current scheme). These may be based on contributions or benefits people receive.

There is in addition a ‘certification’ process whereby Employers can register an existing scheme ‘as good as’ or ‘better than NEST’ with any of the following being ‘acceptable’.

Money Purchase Schemes (existing): 

  • A minimum nine per cent contribution of pensionable pay (including a four per cent employer contribution) or; 
  • A minimum eight per cent contribution of pensionable pay (with a three per cent employer contribution) provided pensionable pay constitutes at least 85 per cent of the total pay bill or;
  • A minimum seven per cent contribution of earnings (three per cent employer contribution), provided that the total pay bill is pensionable 

Final Salary Schemes (existing):

In order to qualify an existing final salary scheme will need to have a contracting out certificate in force as this is taken in evidence that the scheme already meets the ‘reference scheme test’ standard. This test requires for schemes to commence a pension at age 65, payable for life and must be:

a) 1/120th of average qualifying earnings in the last 3 tax years, preceding the end of pensionable service multiplied by
b) The number of years of pensionable service up to a maximum of 40.

What should I be doing now?

If you are an Employer, you should ensure you understand the basic information on these changes and the running of your existing scheme. You may wish to review your existing arrangements to ensure that they continue to meet your requirements and also more importantly are meeting the Pensions Regulator Requirements on an ongoing basis. 

If you are an Employee we can also undertake a full and tailored review as to where you sit currently within the proposed workplace pensions reform regulations.

If you wish to speak to, or make an appointment to see an adviser, please call 01283 536010 or

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