Auto-enrolment

An overview

Workplace pension law changed in 2012 when the government introduced a new law which requires all employers to enrol their eligible workers into a workplace pension scheme automatically if they are not already in one.

The government is getting employers to do this automatically at work so it is easier for people to start saving. The aim is to help more people have another income, on top of the State Pension, when they retire. The State Pension is a foundation for your retirement but if you want to have more, you need to save during your working life. You can opt out if you want to, but if you stay in you will have an additional pension which you get when you retire.

What's more, if you stay in, the University will contribute to your pension and the government will also contribute through tax relief (this means some of your money that would have gone to the government as tax, goes into your pension instead). So, unlike other ways of saving, being in a workplace pension means you're not the only one putting money in.

Auto-enrolment at the University of Reading

Auto-enrolment into a pension scheme at the University started from 1 October 2013. Most employees are enrolled into a pension scheme as part of their contract when they start their employment at the University. Employees not enrolled into a pension as part of their contract will be automatically enrolled if they:

• earn £833 or more in any one month (i.e. the equivalent of £10,000 a year;
• are aged 22 or over;
• are under State Pension age; and
• work or ordinarily work in the UK.

As part of the legislation, the University is required to ensure that any eligible workers are enrolled back into a pension scheme every 3 years. This means that anyone who was automatically enrolled, but then chose to opt out of the pension scheme, may be put back into a qualifying Pension Scheme with effect from 1 July 2025. For staff on Grades 1-5, this is the University of Reading Pension Scheme (URPS), and for staff on Grade 6 and above, this is the Universities Superannuation Scheme (USS).

Everyone who is automatically enrolled into a pension will be contacted directly in writing, either by Aviva (as the pension scheme administrator for URPS) or by the University pensions team (on behalf of USS), after they have been enrolled. Anyone enrolled into a pension can opt out if they want to and the enrolment notice will give details of how to do this. Before making a decision to opt out of pension saving, it's worth remembering that you would miss out on University contributions to your pension, and valuable lump sum benefits for your family should you die while a scheme member. In addition, any contributions you make into the scheme will be eligible for tax relief and so the cost may not be as great as you might think.

Please note that you are not able to opt out of the pension scheme until you receive confirmation that you have joined.

Contractual enrolment

The majority of staff join a pension scheme from their first day of employment under the terms of their contract of employment. There will be some exceptions whereby enrolment will be under the employer duties brought in by the new law and these are mainly sessional lecturers and some employees on very short term contracts.

Information for managers

Workplace pensions law changed in 2012. Every employer has a legal duty to help their workers in the UK save for retirement. They must automatically enrol certain workers into a qualifying workplace pension scheme and make contributions towards it.

This law first came into effect on 1 October 2012 affecting the very largest employers first and has been rolled out according to the size of employer. It came into effect at the University of Reading on 1 July 2013. This is known as our "staging date".

Every three years, the law requires the employer to re-enrol workers who have previously opted out of pension scheme membership if they meet the eligibility criteria on the re-enrolment date. For the University, our next re-enrolment date is 1 July 2025.

The University uses two schemes for auto-enrolment: the Universities Superannuation Scheme (USS) for staff in grades 6 and above and the University of Reading Pension Scheme (URPS) for staff in grades 1-5 or equivalent.

Key points

There are certain key points you will need to know as a manager of other employees and these are:

• anyone meeting the eligibility criteria has to be enrolled
• there is a broad definition of worker so individuals paid on fees forms or similar can be affected
• individuals can opt out once enrolled but they cannot opt out in advance
• existing scheme members are not affected
• the employer must not give any form of inducement to persuade someone to opt out of scheme membership. This is a safeguard covered by the new law.
• the employer's contribution for anyone in membership of USS is 21.6% of pay
• the employer's contribution for anyone in membership of URPS is 5% of pay rising to 7% once they have been a member for 5 years
• no contracts can be backdated