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or by employees (and their employers) makingcontributions towards employees’ ownpersonal pensions, which are individualinvestment contracts marketed and sold byinsurance companies.2. CompulsionState PensionsThe Basic State Pension and S2P arecompulsory in that employees must pay NICs(and therefore build up rights to a statepension).Stakeholder PensionsLimited private pension provision has alsobeen compulsory since 2001 as a result ofthen Government’s introduction of stakeholderpension requirements. A stakeholder pensionis simply a personal pension that meets certainrequirements relating to the maximum level ofcharges it may make.Employers’ limited obligations are:• to designate a stakeholder pension fortheir staff (having first consulted withemployees about the introduction of thestakeholder); and• to allow employees to have theircontributions to the stakeholder deductedfrom their salaries and passed directly tothe insurance company operating thestakeholder.There is no obligation upon employers toactually contribute anything towardsemployees’ stakeholder pensions.Although introduced with the intention ofencouraging pension saving by employeeswho do not have access to an occupationalscheme, the stakeholder regime failed todeliver a marked increase in pension saving sothe “auto-enrolment” regime was introduced.3. National employment savingstrust Automatic enrolments &employer contributions (phasedin from 2012)When?With effect from 2012 UK employers willbecome obliged to automatically enrol all‘eligible jobholders’ in a pension scheme. Thelarger employers will start to automaticallyenrol their jobholders from 2012 but businesswith fewer than 250 employees will, dependingon their size, commence auto-enrolment from1 April 2014 to 1 April 2017.Who?All employers must enrol their ‘eligiblejobholders’:-• aged between 22 and state pension age;• earn at least £8,105 pa (2012/13);• includes all workers other than those whoare genuinely self-employed.Jobholders must be enrolled but they do havethe option of opting-out (subject to time limits).The employer must re-enrol them every threeyears.How much?The employer and jobholder must paycontributions on earnings between £5,564 and£42,275. Employers will pay a minimum of 3%and jobholders will need to contribute 5%(although they will get tax relief on this). Formoney purchase schemes, these contributionlevels are phased in over the first three years.What scheme?The employer can choose to establish its ownscheme or use NEST, the National EmployeeSavings Trust. NEST is subject to somerestrictions which may make it unattractive tosome employers.Where can more guidance be found?The Pensions Regulator is charged withhelping employers prepare for automaticenrolment. Its website contains detailedguidance, which will be updated as the newregime ‘goes live’.www.thepensionsregulator.gov.uk4. Regulating non-state pensionprovisionPension provision in the UK is highly regulatedby both the Government and variousregulatory bodies.Most pension schemes benefit from special taxtreatment by HMRC. In return for complyingwith certain requirements laid down by the taxauthorities, these schemes – and thecontributions made to them by employers andemployees – enjoy generous tax reliefs.PAGE 18