Less than a third of the UK workforce are members of an occupational pension scheme but this will begin to change when the last Labour government’s auto-enrolment scheme starts to be introduced later this year. The scheme is being phased in and employers with 120,000 employees or more will be required to begin auto-enrolling workers, aged 22 and above and earning at least £8,105 a year, into a qualifying pension scheme from 1 October 2012. Smaller employers will have to start auto-enrolling workers in stages between then and June 2015, when employers with fewer than 50 workers will finish the process. Contributions to the pension scheme will come from employers, employees and tax relief, and will start at a very low level (one percent for employers and employees). This will increase gradually until October 2018 when contributions from employers, employees and tax relief will reach a minimum of 8% of earnings.
This is a complex scheme with pitfalls as well as advantages and it is vital that union reps understand it. It is also vital that there is hands-on union involvement in deciding arrangements in companies and organisations, and that reps are able to respond quickly to any attempts to worsen existing pension arrangements or to drive down pay to fund the new scheme.
Labour Research Department’s booklet Workplace pension reform – a practical guide to auto-enrolment can help in this respect. It costs £6.30 and can be obtained from LRD, 78 Blackfriars Road, London SE1 8HF (020 7928 3649) or on-line from www.lrd.org.uk. Get a copy now.
Richard Lynch is a Dudden Hill resident. He is a retired Unite the Union official and currently conducts voluntary work on employment rights for the Brent Community Law Centre. He also acts as an accompanying representative for the GMB union.