Pensions Update — October 2013

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Changes to the automatic enrolment (AE) requirements come into effect in November and April. These are intended to simplify the automatic enrolment process ahead of the roll-out of automatic enrolment to medium and small employers from April 2014. There have been some refinements to the proposals made in the Department for Work & Pensions’ March consultation in the light of responses it received.

All changes come into effect on 1 November 2013 except those under the heading ‘joining window’, which come into effect on 1 April 2014. 

This is relevant to assessing whether a person’s earnings bring him within the scope of automatic enrolment. A new definition of pay reference period (PRP) is introduced alongside the existing one. Employers can therefore choose the one that works best for them. The current definition links the PRP to the period by reference to which a person is paid (e.g. one week for a person paid by reference to a period of a week), but this does not work well for most payroll systems, which are linked to tax periods, paydays and pay frequency. It also poses problems for employers operating variable pay patterns (e.g. 4/4/5, where jobholders are paid four weeks’ pay on some pay days and five weeks’ pay on others)…

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