The government estimates that between eight and 10 million people are not currently making payments into a personal or workplace pension.

In an effort to address this and to help lower earners save more for retirement, the previous Labour Government introduced wide ranging reforms of workplace pensions, detailed in The Pensions Act (2008).

These reforms will affect every UK employer, regardless of size or number of employees and represent the biggest change to workplace savings in a generation.

The biggest change is the obligation on employers, from October 2012 and phased in by size of company, to automatically enrol all eligible jobholders into a qualifying workplace pension scheme.

Employers will be forced to make pension contributions on behalf of their workers. Employees will also have to make payments to the scheme.

The amounts will be phased in over time, eventually resulting in a payment of 4% of salary from workers and at least 3% from their employer. As an incentive, the Government will contribute 1% in the form of Income Tax relief.

Companies have a choice of pension schemes which will meet the new rules. They can have their own company scheme or use the government's own National Employment Savings Trust (NEST). Many companies will need to take professional advice on the most appropriate scheme for them.

Every employer has specific duties to their employees under The Pensions Act (2008). Failing to meet the employer duties constitutes a breach of the rules of the Act, punishable by a fine or prison sentence.

For further information on company pension schemes, contact the Towergate team on 01227 285 044 or via email. You can also visit Towergate's website.