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Auto enrolment in pension scheme

From October 2012 Government are introducing changes to pension legislation, known as "automatic enrolment" (auto enrolment). This will affect all employers, large and small, throughout the UK , certain existing employees who are not currently in a “qualifying pension scheme” and newly appointed employees.

In a staged implementation, starting in October 2012, all UK employers will have to "auto enrol" certain employees who are not already in a pension scheme into a "qualifying pension scheme." These changes will start to affect certain employees from February 2013 (the “staging date”), although the we as an employer are considering, as permitted by the legislation, postponing its auto enrolment duties until April 2013. Other Derbyshire Pension Fund employers will also need to decide if they wish to postpone, for up to three months, the auto enrolment duties that will apply from their own individual staging dates.

For the Derbyshire Pension Fund the "qualifying pension scheme" is the Local Government Pension Scheme (LGPS). This is a very good pension scheme and a large proportion of current employees are already paying into the scheme, but not everyone has chosen to join, or has been permitted to do so. If you are already a current member of the LGPS you will not be affected by the auto enrolment rules but your employer will write to you and confirm this.

If, as an existing employee, you are not paying into the LGPS, you will be brought into the Scheme if you are an eligible jobholder ie:

  • you are aged between 22 and state pension age
  • you have earnings in excess of £10,000 per annum.

Your employer may choose to apply a “Transitional Delay” period in order to delay auto enrolment until October 2017.

If this is affects you, you will be written to by your employer explaining what's happening.

Anyone auto enrolled into the LGPS can opt back out of the scheme and have a refund of contributions paid as long as they do this quickly. If you do opt out, every three years you will be auto enrolled back into the LGPS again.

Other workers not in the “Eligible Jobholder” category will still have the option to join the LGPS.

If you have two or more jobs with us then the earnings from each are treated separately, not aggregated, for the purposes of determining the category of worker.

New employees, with a contract for at least three months will continue to be contractually enrolled immediately under the LGPS rules (with the right to opt out). Those appointed for less than three months, as well as casual and relief employees, have the option to join.

These provisions apply to new starters both before and after an employer’s auto enrolment staging date.

If you are not already a member of the LGPS and you wish to join, you do not have to wait until the auto enrolment rules start. If you want to join, or find out more about the benefits of the LGPS, please phone the Derbyshire Pensions Team tel: 01629 538900.