With all employers soon to be required to auto-enrol their employees on a pension scheme, David Heaton highlights some key points that you need to know.

Pensions are big news for everyone. The wealthy had their lifetime tax-free fund value capped at £1.5m, soon to be reduced £1.25m, and the less well-off will have their state pension ‘enhanced’ to a flat £144 per week from 2017. In the background, the ‘auto-enrolment’ system (AE) is quietly growing in workplace pension schemes. Only the largest employers have been affected so far, but almost every employer (including charities) will have to comply before February 2018. Unlike stakeholder pensions, there is no exclusion for employers with fewer than five employees.

At some point between October 2012 and early 2018, all employers will have to enrol every ‘eligible jobholder’ automatically into a ‘qualifying workplace pension scheme’ and pay an employer contribution. This will take place in stages starting with the largest employers, and leaving small employers and ‘new’ payrolls (set up after April 2012) until 2015 and beyond. There is a list of start or ‘staging’ dates on the Pensions Regulator’s website www.tpr.gov.uk.

Workers aged between 22 years old and state pension age with high enough earnings must be enrolled as soon as their employer is obliged to implement the AE rules. Employees will be able to opt back out, but they will be automatically re-enrolled every three years (when, as the rules currently stand, they will be able to opt back out yet again).

But here is a trap here too. Certain self-employed contractors (those committed to provide personal service) also qualify as ‘eligible jobholders’, so must be auto-enrolled even though they don’t appear on the payroll.