Auto Enrolment In The Tech Sector

Historically, pensions have been a problem for traditional industries such as manufacturing. Young, dynamic industries such as the technology sector have perhaps felt rather smug that they are not embroiled in the complexities that surround pension provision, focusing instead on remuneration based on pay, bonuses and share incentives, and expect employees, who tend to have relatively high mobility between jobs, will provide for their own retirement.

However, this is changing with the government's "automatic enrolment" regime, which may be the biggest change ever to the law on workplace pension provision. All employers will be required to put their employees into a pension scheme, make contributions to it and (if they choose not to cover all the cost) deduct contributions into the scheme from employee's pay. Employees can opt out after the event, but must be put back in and given the chance to opt out again every three years.

The cost of paying into the scheme is relatively low, at least until 2017, but the greatest problems for businesses are the complexities in the administration, particularly for a sector which does not tend to provide pensions and so has no infrastructure dealing with them.

As soon as the law applies to a business (some time between October 2012 and February 2018, depending on the size of the workforce) it must assess the age and earnings for every worker, to decide who must be auto enrolled. Anyone who does not qualify will then need to be auto enrolled immediately if they qualify later. This has to be monitored because it is not possible to auto enrol those employees for whom it does not apply, so that the business has to make sure it puts in everyone that it is obliged to, and no one else, as soon as auto enrolment starts.

In addition, the business needs to deal with opting out. It is not permitted to encourage opting out, so the employer should even avoid asking for candidates' intentions on opting out at job interviews. Once an employee decides to opt out, they fill in a form from the pension...