Starting from 1 October 2012, and depending on PAYE scheme size, employers will have to auto-enrol eligible employees, and make mandatory employer contributions, into a qualifying workplace pension scheme. Employers will be given a date from which they must auto-enrol (known as their "staging date"), by the Pensions Regulator, if they are using a defined-contribution pension scheme or the National Employment Savings Trust (Nest) as their qualifying pension scheme.
From their staging date, employers must auto-enrol eligible employees in a pension scheme when they reach the income tax threshold but contributions will kick in only from the employee threshold for national insurance contributions. Employers will be able to operate a three-month postponement window for all employees (ie newly eligible existing employees and new employees), so that employees on short-term contracts do not need to be auto-enrolled in a pension scheme, although they will be able to opt in voluntarily during the postponement period.
The staging date for pensions auto-enrolment for each employer is based on the number of people in its PAYE scheme on 1 April 2012. The larger the employer’s PAYE scheme, the earlier the staging date, with the first staging date being 1 October 2012 for employers with 120,000 or more. It is important for employers to note that, even if the number of people in their PAYE scheme changes between 1 April 2012 and their staging date, the staging date stays the same, even if the change is significant.